Supply chain disruption threatens foreign giants as Covid-19 rages

Key suppliers for major companies like Netflix and Nike have been forced to host employees on site or cease production as Covid-19 keeps spreading, especially in the southern region.

Taiwanese motherboard manufacturer ASRock in the southern province of Binh Duong estimates that its July revenues would take a 5-20 percent hit after it temporarily stopped production on Monday, according to a security filing.

The company, which is a server provider for streaming giant Netflix, would shift production to other contract manufacturers while waiting for local approval of its Covid-19 bubble, president Hsu Lung-luen told Nikkei Asia.

Ching Feng Home Fashions, which makes curtains for retail chain Walmart and furniture giant Ikea, stated in a Monday securities filing in Taipei that its factory in Binh Duong Province would close from July 19 to August 2. It also cited the need to meet a government requirement that employees eat, live and work on site.

Nike’s contract manufacturer, footwear maker Pou Chen and South Korea’s Changshin Vietnam, have shut down their HCMC factories last week, which “may exacerbate the supply chain disruptions,” S&P Global Market Intelligence said in a report.

Samsung Electronics, which makes half of its smartphones in Vietnam, has also suspended work at three plants in HCMC and temporarily cut its workforce from 7,000 to 3,000.

AirPods assembler GoerTek and South Korea’s Kumho Tire have set up accommodation for their workers to sleep on site.

As HCMC and southern provinces undergo strict social distancing orders for at least two weeks, factories are scrambling to keep their production going while ensuring workers’ safety.

HCMC accounts for nearly 65.6 percent of over 74,500 cases that Vietnam has recorded in the latest Covid-19 wave which began April 27.

By Dat Nguyen – VnExpress.net – July 23, 2021