Samsung to move PC production to Vietnam as costs soar

The South Korean tech giant will halt production at its last remaining overseas computer manufacturing facility in China’s Suzhou city instead of focusing more on research and development.

The decision was made “due to fierce market competition”, reported South China Morning Post.

Samsung is among companies rethinking their production and supply chains amid rising Chinese labour costs, a U.S.-China trade war and the blow from the COVID-19 pandemic.

The plant was set up by Samsung in Suzhou in 2002, the year after China joined the World Trade Organisation, with overseas shipments in 2012 eventually totaling $4.3 billion.

At its peak in 2012, the factory had 6,500 employees, although the latest change is only set to affect around half of the 1,700 employees who were on contract as of the end of 2019.

Under the closure, around half the 1,700 employees on contract at Samsung Electronics Suzhou Computer will be affected, excluding those involved in research and development, the paper reported on Friday, citing a notice to Samsung staff.

The factory shipped $4.3 billion worth of goods out of China in 2012, a figure that had sunk to $1 billion by 2018, the Hong Kong newspaper said.

A Samsung spokeswoman declined to comment on the factory’s revenue and shipments, or details regarding employees.

“China remains an important market for Samsung and we will continue to provide superior products and services for Chinese consumers,” the company said in a statement.

Last year, Samsung closed its last mobile phone factory in China last year, with production from the faculty in Huizhou switched to Vietnam, a move which greatly affected the local economy.

The South Korea conglomerate, though, still has other plants in Suzhou, including the Samsung Suzhou LCD plant that manufactures screens, while it recently opened a flash memory chip factory in the Chinese city of Xi’an.

Source: SCMP, Nikkei Asian Review