Korean exporters on edge as COVID-19 disrupts overseas operations

South Korean companies, including Samsung and LG, are on edge about the possibility of critical production setbacks at key manufacturing bases in Vietnam and China as a result of coronavirus fears.

The nation’s largest tech firms, Samsung Electronics and LG Electronics, produce smartphones and home appliances in Vietnam. In China, Samsung and SK hynix produce chips, LG Display makes organic light-emitting diode panels, Hyundai Motor and Kia Motors manufacture automobiles and LG Chem produces batteries.

Last week Samsung Electronics canceled a groundbreaking ceremony for its mobile research and development center in Hanoi, which was scheduled for Saturday, to prevent the spread of the virus. It is the firm’s largest R&D center in Southeast Asia and cost about 260 billion won ($210 million) to build. Vice Chairman Lee Jae-yong and other key executives were scheduled to attend.

Analysts say Samsung may delay investment in the expansion of NAND flash facilities at its Xian plants in China due to the spread of COVID-19. In December, Samsung announced plans to invest 9.5 trillion won in the chip plants. As the US government has restricted its citizens from traveling to China, the plants may find it hard to set up US chip equipment from Applied Materials and Lam Research, industry watchers said.

LG Group said it strictly manages personal hygiene when employees enter and exit the company’s facilities in Vietnam and China and also disinfects some of its plants there.

LG Display initially planned to mass-produce OLED panels at its Guangzhou plants in the first quarter of this year. But delays are expected because Korean engineers have been forced to cancel business trips to China.

Hyosung, which operates spandex plants in Vietnam, began disinfecting its plants early last month. It has canceled in-house workshops, dinners and seminars both in Korea and Vietnam. LSIS, an affiliate of LS Group, ordered the heads of its branches in Vietnam to report the temperatures of its employees to its headquarters once a day.

Korean carmakers have already slowed down their assembly lines and suspended production for a few days last month over supply disruptions involving parts from China. Due to the halt in production, exports of automobiles dropped 16.6 percent in February on-year, according to the Trade Ministry.

Here, some large companies had to shut down their plants as some of their employees were found to be infected. Samsung Electronics, LG Display and LG Innoteck shut down their Gumi plants for a few days and Hyundai Motor’s Ulsan plant had to pause its operations due to confirmed cases of the coronavirus. On Tuesday, Hyundai Mobis’ technology lab in Gyeonggi Province was closed for two days after one of its employees came down with COVID-19. 

By Shin Ji-hye (shinjh@heraldcorp.com)