Vietnam Returning To Full Production Next Month, Mostly
According to the local press in Ho Chi Minh City, a number of major CE companies located in or around areas affected by the recent COVID-19 outbreak in Vietnam, are expecting to resume full production by the end of November. A number of these companies are located in Saigon Hi-Tech Park, about 10 miles from the center of Ho Chi Minh City, and is the home of the Vietnam operations of Intel (INTC), Jabil (JBL) and Air Liquide (AI.FP), and about 10 miles from Samsung Electronics (005930.KS) Vietnam plant.
Locals indicate that many of the large plants in the Saigon Hi-Tech park are operating at ~70% capacity due to travel restrictions, but are expected to see full production within the next few weeks. Samsung’s factory, which shuttered ~19% of its lines as workers at its main complex were reduced by more than half, and was providing local sleeping arrangements for workers to entice them to remain at the factory. Samsung generated more than $56b in export sales last year and had been on a pace to exceed that this year, with the possibility still existing if they can resume full production quickly.
Ho Chi Minh City itself began to reopen on a conditional basis this month and has been seeing strong demand from consumers who have been under extended social distancing and quarantining. However, with factories still operating at reduced rates, shortages have been seen in retail consumer electronics, even after a number of retailers had been building larger than usual inventories in anticipation of the increased demand. Local CE retailers indicate that shortages continue with laptops and tablets, and even smartphones more recently, where Chinese smartphone brands are in shorter supply than those from Samsung and Apple (AAPL), due to power issues in parts of China. In all cases however, supply does not meet demand.
One of the large retailers gave the example that they sell ~15,000 Samsung devices every day, but Samsung has been able to supply only 30,000 to 40,000 per week during the lockdown, and other retailers indicate that all iPhone models are in short supply, with iPhone 11 (released 9/2019!) deliveries delayed until next year and iPhone 13 (9//21) deliveries at ~50% of the order rate currently. Smartphones priced below $265 are out of stock at most retailers and laptops in a similar price range, which are typically used for on-line learning, were sold out quickly when they appeared, as Ho Chi Minh City students will be studying on-line for at least the remainder of the year.
With Ho Chi Minh City representing ~80% of Vietnam’s COVID-19 cases as of last month, and fears that due to the exclusion of rapid test results in government figures, the number of cases during the outbreak peak were underreported, the city was on lockdown for roughly three months. As of the beginning of October restaurants were able to serve take-out meals again and essential businesses were able to reopen. Residents having at least one dose of vaccine within 14 days or having recovered from COVID-19 within the last 6 months were allowed to leave their houses, and while inner city checkpoints were being removed, security personnel are continuing to patrol the city and travelers must submit a request to the Transportation Department to enter. All restrictions on construction projects, office parks, and export zones are also allowed to reopen, although indoor activities are limited to 10 people if unvaccinated and 70 if vaccinated and public transport will operate at 50% capacity, however bars, spas, and cinemas remain suspended. Most travel guide services tell those entering the city to “remain cooperative if approached and questioned by law enforcement officers and make allowances for business disruptions” which seems to give a good indication as to how things are progressing in the city.
Locals indicate that many of the large plants in the Saigon Hi-Tech park are operating at ~70% capacity due to travel restrictions, but are expected to see full production within the next few weeks. Samsung’s factory, which shuttered ~19% of its lines as workers at its main complex were reduced by more than half, and was providing local sleeping arrangements for workers to entice them to remain at the factory. Samsung generated more than $56b in export sales last year and had been on a pace to exceed that this year, with the possibility still existing if they can resume full production quickly.
Ho Chi Minh City itself began to reopen on a conditional basis this month and has been seeing strong demand from consumers who have been under extended social distancing and quarantining. However, with factories still operating at reduced rates, shortages have been seen in retail consumer electronics, even after a number of retailers had been building larger than usual inventories in anticipation of the increased demand. Local CE retailers indicate that shortages continue with laptops and tablets, and even smartphones more recently, where Chinese smartphone brands are in shorter supply than those from Samsung and Apple (AAPL), due to power issues in parts of China. In all cases however, supply does not meet demand.
One of the large retailers gave the example that they sell ~15,000 Samsung devices every day, but Samsung has been able to supply only 30,000 to 40,000 per week during the lockdown, and other retailers indicate that all iPhone models are in short supply, with iPhone 11 (released 9/2019!) deliveries delayed until next year and iPhone 13 (9//21) deliveries at ~50% of the order rate currently. Smartphones priced below $265 are out of stock at most retailers and laptops in a similar price range, which are typically used for on-line learning, were sold out quickly when they appeared, as Ho Chi Minh City students will be studying on-line for at least the remainder of the year.
With Ho Chi Minh City representing ~80% of Vietnam’s COVID-19 cases as of last month, and fears that due to the exclusion of rapid test results in government figures, the number of cases during the outbreak peak were underreported, the city was on lockdown for roughly three months. As of the beginning of October restaurants were able to serve take-out meals again and essential businesses were able to reopen. Residents having at least one dose of vaccine within 14 days or having recovered from COVID-19 within the last 6 months were allowed to leave their houses, and while inner city checkpoints were being removed, security personnel are continuing to patrol the city and travelers must submit a request to the Transportation Department to enter. All restrictions on construction projects, office parks, and export zones are also allowed to reopen, although indoor activities are limited to 10 people if unvaccinated and 70 if vaccinated and public transport will operate at 50% capacity, however bars, spas, and cinemas remain suspended. Most travel guide services tell those entering the city to “remain cooperative if approached and questioned by law enforcement officers and make allowances for business disruptions” which seems to give a good indication as to how things are progressing in the city.
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