Memory Chip Prices Are Squeezing Samsung's Vietnam Phone Plants
The same memory price surge that gave Samsung's chip business a record quarter cut net margins nearly in half at its two Vietnamese phone factories.
[Memory Chip Prices Are Squeezing Samsung's Vietnam Phone Plants]
Samsung's two phone factories in Vietnam just posted a strange quarter: they shipped more, booked more revenue, and kept less of it.
Samsung Electronics Vietnam Thai Nguyen (SEVT), the company's biggest phone plant, grew second-quarter revenue 24% year-on-year to KRW 11.07 trillion, roughly $7.5 billion. Its net profit fell by a third, from KRW 0.81 trillion to KRW 0.53 trillion. Samsung Electronics Vietnam (SEV) in Bac Ninh followed the same pattern: revenue up 24% to KRW 6.71 trillion, net profit down from KRW 0.50 trillion to KRW 0.39 trillion. Net margins at both plants dropped from around 9% to around 5%.
Where did the money go? Samsung's own books give the answer: memory.
AI demand has sent memory chip prices soaring this year. Samsung's semiconductor division earned a record KRW 89.2 trillion in operating profit in the same quarter. But for the divisions that buy memory to build phones, the same surge was a cost disaster. The Device eXperience (DX) group, which houses smartphones, TVs and appliances, posted an operating loss of about KRW 0.82 trillion, its first quarterly loss ever. Samsung's explanation: component prices pushed up manufacturing costs. One price surge gave one Samsung division a record profit and handed another its first loss. Vietnam's phone plants sit on the losing side.
That also explains why Samsung's other two Vietnamese factories were fine. Samsung Display Vietnam (SDV) grew net profit about 46%, and the consumer electronics complex in Ho Chi Minh City (SEHC) about 26%. If the problem were Vietnamese wages or electricity, costs every factory pays, all four would have suffered. Only the memory-hungry phone plants did.
Combined, the four subsidiaries booked about $17.3 billion in second-quarter revenue, up about 20% from a year earlier, while combined net profit fell 16.7% to about $996 million. Almost the entire gap came from the two phone plants.
The squeeze is also new. Over the first half as a whole, the two phone plants still earned 23–33% more than a year earlier; the first quarter was strong. The turn came in the second quarter, when memory prices started flowing into production costs. And Samsung expects component cost pressure to continue into the second half. Whether margins at Thai Nguyen and Bac Ninh stay stuck around 5% is the number to watch in the next report.
For Vietnam, this is not a story of the world's factory floor breaking down. Orders and output keep growing, and the problem sits upstream in components, not on Vietnamese production lines. What matters is duration: if memory prices stay high for long, phone assembly will keep earning thin margins on record output.
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