The electrical substation responsible for powering a Samsung smartphone production complex in northern Vietnam caught fire on Wednesday, slowing the South Korean electronics giant’s manufacturing operations as it gears up for the upcoming launch of its flagship Galaxy Note 8.
The substation has served as Samsung’s electricity source for its Thai Nguyen Province production complex since its installation in September 2014.
The Northern Power Corporation, a subsidiary of Electricity Vietnam, confirmed on Wednesday that the power complex had caught fire, disrupting the power supply at the facility and significantly slowing operations.
The cause of the fire is still unidentified.
An agreement between the power supplier and Samsung calls on the South Korean firm to source power from diesel generators to cut down on lost time while the substation is repaired.
The incident occurred at a crucial time for Samsung, just as workers at Samsung Thai Nguyen are speeding up the production of the Galaxy Note 8 before its scheduled unveiling at an event in the U.S. on August 23.
The Note 8 is the most important product line for Samsung in the second half of this year.
Using diesel generators is expected to result in cost overruns, though the company said there are no immediate statistics available.
Though normal operations are expected to resume relatively quickly, the situation is another hit to Samsung Vietnam after exports slipped last year following the ‘immature death’ of the Galaxy Note 7 due to the exploding battery scandal.
A Samsung representative said the incident will not have a significant impact on production at the Thai Nguyen complex, “however, if the power loss is long term, production will surely be influenced.”
The source also added that Samsung Thai Nguyen’s 70,000-strong workforce is a huge contributor to Vietnam’s export revenue.
Samsung Vietnam is targeting US$50 billion in revenue from mobile phone exports and spare parts this year.
In 2016, the company posted an export turnover of $40 billion, accounting for 22.7 percent of Vietnam’s total exports.
This means any problems with the Thai Nguyen complex will indirectly affect Vietnam’s economic growth for the year, the company representative added.
The Northern Power Corporation said power supply for Samsung Thai Nguyen will return to normal by August 10 at the earliest.