Samsung Electronics is encountering difficulties in Vietnam as potential US tariffs jeopardize its reliance on the country as a key manufacturing hub.

Around 60% of the 220 million phones Samsung sells annually are produced in Vietnam, with many exported to the US, according to Counterpoint Research.

The Trump administration previously proposed a 46% tariff on Vietnamese exports, which has been temporarily reduced to 10% for 90 days. Ongoing discussions between Vietnam and the US aim to further lower the tariff, targeting a range of 22% to 28%.

In light of these uncertainties, Samsung and its suppliers are reportedly considering adjustments to their production strategies.

Options under consideration include increasing output in India or South Korea, although these changes would come with significant costs and time delays, according to sources familiar with the situation.

Samsung has not commented on its plans but has indicated a willingness to adapt to tariff changes using its global supply chain.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ Samsung’s strategic investment created unprecedented economic interdependence

Samsung’s expansion in Vietnam represents one of the most successful foreign direct investment stories in Southeast Asia, growing from an initial $670 million investment in 2008 to nearly $19 billion by 2022, a 32-fold increase 1.

This commitment transformed Vietnam’s economy, with Samsung accounting for $54.4 billion in exports by 2018, representing approximately 25% of Vietnam’s total export turnover 2.

The scale of operations is staggering: Samsung employs over 160,000 workers in Vietnam (30% of its global workforce) across six manufacturing facilities, with its factory in Thai Nguyen alone producing more mobile phones than any other factory worldwide 34.

The relationship has created mutual vulnerability, as 60% of Samsung’s global phone production now happens in Vietnam, while Samsung’s operations generate about 28% of Vietnam’s GDP 15.

This interdependence explains why Vietnam quickly engaged with the Trump administration after tariff announcements, as the country’s economic fortunes are closely tied to Samsung.

2️⃣ Supply chain localization takes years to build but moments to disrupt

Samsung’s development of a local supplier network in Vietnam shows how complex modern supply chains are to establish, growing from just 4 Vietnamese suppliers in 2014 to 50 by 2020 6.

Recent Samsung developments