Barely a year ago, companies making parts for Apple and Google were pouring into northern Vietnam, competing for workers to churn out products. Now, villages that house these tech factory workers remain sleepy and becalmed in the sweltering June heat. The vast factories in the region, operated by industrial giants like Samsung, have substantially slowed production, calling in employees as rarely as once a week.
“There’s little work these days,” Thanh, a 30-year-old Samsung worker in Thai Nguyen province, told Rest of World. (She, like other workers Rest of World spoke to for this piece, requested to be identified by a pseudonym as she is not authorized to speak with the press.)
Thanh spoke to Rest of World outside an empty wet-market, where meat and vegetable stalls waited for customers. All around were more signs of abandonment: A once-popular goat restaurant across the street was darkened and shuttered, and had been that way for months, said a grocery store owner. Her own store catering to Samsung workers was empty, too. She said sales had sunk by 40% over the last year.
Come evening, streets that should have been filled with workers leaving their day shifts remained quiet.
These are the symptoms of a global slump in the demand for electronics, and the result of difficulties in sourcing components from China. Once the pandemic’s peak began to decline, people in the U.S. or Europe tamped down on their purchases of new smartphones and TVs; when inflation bit, they tightened their belts another notch. New orders and production for big electronics companies tanked to their worst levels since mid-2020. The effects of that contraction have rippled across the world, throwing the lives of tens of thousands of people who make these items into disarray.
In the first five months of 2023, 45,000 people lost jobs in electronics manufacturing in Vietnam. The country’s biggest company, Samsung, which once offered lucrative pay that was a worker’s dream, is now slashing work hours, renewing fewer contracts, and furloughing some workers, current employees told Rest of World. Dorms that housed employees assembling smartphones and Apple Airpods stand half-empty. According to workers employed in these factories for up to a decade, this is the worst slump in their memory.
“We see limited prospects of a rebound,” Shivaan Tandon, economist for emerging Asian markets at analysis firm Capital Economics, told Rest of World. “Even when global demand does start to recover, firms are more likely to respond by running down their stocks.” It was a “reversal of fortunes,” said Tandon — the bleak aftermath of a whirlwind of pandemic spending.
Just as Vietnam plays a crucial role in electronics production, the sector is a key employer for the country. Samsung alone employs about 100,000 workers in Vietnam, and last year accounted for 9% of the entire nation’s export income. Its presence helped Vietnam become the world’s second-biggest exporter of smartphones in 2021, outstripped only by China. (Samsung did not respond to requests for comment from Rest of World.)
In Thai Nguyen, where Samsung runs a massive smartphone assembly factory, the export value of mobile phones, tablets, and electronics components plummeted by nearly 25% year-on-year in March 2023, deepening a slump that began in 2022. Reports have described the company apparently cutting down on global phone production, but Samsung has not confirmed any changes.
It was a “reversal of fortunes,” said Tandon — the bleak aftermath of a whirlwind of pandemic spending.
Thanh, like many others, wasn’t prepared for this cycle of boom and bust. Six years ago, she had abandoned life at her family’s rice farm to chase higher wages at Samsung’s massive smartphone assembly factory.
Factory workers generally rely on overtime pay to save money. Once a fact of life, overtime is now nonexistent, Thanh said. This year, there have been periods when she was called into work for only three days a week, she said, slashing her monthly earnings to as low as 6 million dong ($255) from 10 million dong when the factory was operating at its peak. Many of her colleagues have quit due to the low pay, but Thanh can’t. “I need my salary at Samsung to pay off a [home] loan,” she said. She’s now looking for a side job as a dishwasher.
In the neighboring Bac Giang and Bac Ninh provinces — home to Samsung’s factories and those of key Apple suppliers like Foxconn and Luxshare — people aren’t faring much better.
Nam, a worker at Samsung’s smartphone factory in Bac Ninh, moved to the region from a remote mountainous province close to the Chinese border nearly a decade ago. Samsung was an obvious choice for his first job as his close relative was already working there, and the company was recruiting aggressively in his hometown. Now, he said, he is “fed up.”
Despite climbing the ranks over his years at Samsung, Nam’s total monthly earnings have remained the same — at 8 million dong ($340) — because his work hours have decreased. His overtime pay evaporated in mid-2022. His housemates, who used to work for Samsung and other factories in the area, have quit and moved out. “I would like to make more money for my family, for my life to be more comfortable,” he told Rest of World.
Nam’s close relative’s team at Samsung — laptop assembly, or “new computing” — was entirely disbanded at the end of 2022, he said. She remains effectively furloughed, he said, called into work on an average of just one day a week. Some factory workers from the region have returned to their hometowns to start their own businesses, or even sought work overseas, current and former Samsung employees told Rest of World.
The company — already meticulous in employee screening — is allegedly also being more selective in whose contracts it chooses to renew, according to a current employee familiar with the matter. They spoke to Rest of World on condition of anonymity because they are not authorized to speak to the press.
Nam’s close relative’s team at Samsung — laptop assembly, or “new computing” — was entirely disbanded at the end of 2022, he said.
While the slump is clearly visible among Samsung workers due to the company’s vast scale, its effects are much wider. Many Korean tech manufacturers saw drops in orders as early as March 2022, followed by Chinese companies, Hoan Tran, associate director for northern Vietnam at recruitment firm Navigos Search, told Rest of World. That loss of business rippled down to their factories in Vietnam.
A shortage of input materials from China compounded the problem, noted a March report authored by the Vietnamese Communist Party committees of agencies and businesses in Bac Ninh province. According to the report, the disruptions in China’s supply chain due to its zero-Covid policy have “directly affected enterprises in the province because many sectors rely on China, like electronics and metals manufacturing.”
Hoan said her business contacts knew of factories cutting workers’ hours by as much as half, and allegedly either paying them only the regional minimum wage or placing them on unpaid leave. “Factories usually keep a number of [core] workers to maintain stable production. They then recruit the rest from labor-outsourcing companies to conveniently adjust the number of manufacturing workers,” Hoan told Rest of World. Surges in orders now come just a month in advance, as opposed to 3–6 months ahead of time, because brands are uncertain about demand, she said.
There are some manufacturers, however, that are still looking to hire people, such as fledgling factories outside the established hubs of Bac Giang and Bac Ninh, said Hoan. At least one new Taiwanese factory is currently in need of 10,000 workers, she said.
But even if demand recovers, it would likely take time for workers to bounce back to make the electronics that people want.
“This is somehow worrying, for the main reason that electronic workers tend to be qualified workers,” Julien Brun, managing partner at the logistics consultancy CEL, based in Ho Chi Minh City, told Rest of World. This means they require more training and advanced skills. “So as demand recovers decent growth, there will be a certain inertia to rehire and retrain workers.”
Nam used to believe his job at Samsung was his best option. He now hopes to make a leap into the construction industry. “I might stay [here] for another three or four years, but then, instead of working in a safe, air-conditioned environment, I might as well endure the heat and rain while earning more money in a shorter time period,” he said.
“Wouldn’t that be better?”
