Samsung Slowing Manufacturing As Global Economy Hiccups And Sputters

June 16, 2022 by Dave Haynes

A shaky global economy and EVERYTHING else going on lately has evidently compelled tech giant Samsung Electronics to temporarily halt new procurement orders and asking multiple suppliers to delay or reduce component and part shipments, reports the news organization Nikkei Asia.

Samsung’s slowdown applies to a range of components across multiple product lines, including displays. The Korean firm did not directly respond to Nikkei Asia, but market conditions certainly suggest these sorts of decisions are being forced on many or all electronics companies.

Reports Nikkei Asia:

Samsung told suppliers that the company needs to closely review its inventory levels of both components and final products to ensure stock on hand is manageable, according to the sources. Two people said the move will last until the end of July. One of the people said shipments from that source’s company have not been completely halted but the volume of the company’s planned shipment to Samsung for July has been slashed by 50%.

Samsung’s inventory assets reached 47.6 trillion won ($36.9 billion) at the end of March, up from 41.4 trillion won in December, according to its first quarter earnings report. The ratio of inventory assets to total assets also jumped to 10.8% from 9.7% during the same period.

The South Korean tech giant’s notice to suppliers comes in stark contrast to its previous plan last month, when it told suppliers that it had a relatively healthy view of the year ahead and that it still planned to ship at least 270 million smartphones in 2022, a similar level as last year, Nikkei Asia earlier reported. Chinese makers Xiaomi, Vivo and Oppo, by contrast, have scaled back orders by at least 20% due to the lockdowns in China and weakening demand in the European market for the coming quarters.

More broadly, there are reports of “excessively high inventory levels” among display manufacturers, forcing prices down. Then there are the ongoing supply chain issues out there.