Vietnam’s supply chain is suffering from the impact of the coronavirus epidemic, which could stall production of the latest Samsung smartphones, the Ministry of Industry and Trade told Reuters on Friday (Feb. 21).

“Car, electronics and phone manufacturers are experiencing difficulty in acquiring supplies and materials due to disruptions from the virus,” the ministry said in an emailed statement.

“Vietnam relies much on China for materials and equipment, which makes the country become vulnerable when such an outbreak happens,” it said.

Vietnam lifted some restrictions on cross-border trade on Thursday (Feb. 20) to help the economy, but there are still some strict rules in place.

Samsung is Vietnam’s biggest foreign investor; the epidemic is expected to affect production of two new phone models since most of the components come from China, the ministry said.

“Samsung is considering using sea or air transport to import needed components, but it would lift up the cost and would hardly meet the production schedule and demand,” the ministry said.

Samsung said it was “making our best effort to minimize impact on our operations.”

No plants are reported as being totally shut down because of the virus. Car and electronics manufacturers are looking for alternative materials.

“If the epidemic is not contained in the next 1-1.5 months, we will run out of inventory. Domestic TV and phone output will sharply decline,” said the trade ministry, citing a report by the Vietnam Electronics Business Association.

Regardless, the government said it is still sticking to an economic growth target of 6.8 percent in 2020.

Chinese lenders have cut their prime lending rate to try and prop up their country’s economy, which has been ravaged by the coronavirus.

S&P had previously warned China that it would face a surge of bad loans costing up to $1.1 trillion as a fallout from the effects of COVID-19.

Major Chinese lenders reduced their one-year loan prime rate, a key number used across the Chinese financial system, by 0.1 percentage points, to 4.05 percent.

 

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