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South Korea Firms Prepare for Worst After Samsung Virus Case

(Bloomberg) -- Samsung Electronics Co., LG Electronics Inc. and other companies in South Korea are taking precautions against the coronavirus after a rising number of cases in the country, including the infection of a Samsung employee at a local production facility.

The country’s largest technology company shut down operations at a plant in Gumi City over the weekend after the employee tested positive for the virus, but resumed operations around 1:00 p.m. local time Monday. Samsung Electronics shares slid as much as 3.7% in Seoul.

While the novel coronavirus originated in China, it is now spreading to other countries, including Korea with more than 750 confirmed cases. Companies from Japan to Singapore are taking steps to limit the spread among employees and within their facilities.

South Korea warned its fragile economic recovery is under threat from the coronavirus that has spread dramatically across the country over the past week, and pledged action to minimize the fallout. The won dropped to a six-month low and stocks plunged after South Korea raised its infectious-disease alert to the highest level as the outbreak worsened.

The nation’s Centers for Disease Control said Monday there are 161 more virus cases, bringing the total to 763. The death toll rose by 2 to 7 people. The city of Daegu has seen a spike in cases in recent days.

Read more: South Korea Braces for Economic Pain as Virus Cases Soar

The Samsung case is troubling because Gumi has a collection of facilities operated by Samsung, LG Electronics, LG Display, Toray Group and other companies. Samsung has two production lines in Gumi, about 200 kilometers (124 miles) southeast of Seoul, for some of its smartphones.

“We’ve been worried about disruptions in the tech supply chain that are causing delays in importing parts from China,” said Lee Hang-koo, a researcher at the Korea Institute for Industrial Economics & Trade. “But the problem is getting serious as infections are soaring near the Gumi Industrial Park, a home-ground of plants producing core parts of electronics devices.”

“Companies have shifted most of their production to China and Vietnam for cost cutting but still high-tech electronic parts are produced at home because of concerns about leaks in core technology,” Lee added.

LG Electronics, which has TV plants in the Gumi industrial complex, told workers who commute from Daegu to work from home. LG Display has instructed workers who have visited the Daegu area to not come into the office for two weeks, while headquarters staff are restricted from visiting the region without approval from management. An LG Electronics spokesperson said its research center in Incheon was shut after the company found out an employee’s family member was infected.

Samsung has shifted more than half of its smartphone production to Vietnam but still produces some of its premium models at the Gumi complex. The stoppage at the plant may affect production of Samsung’s high-end models including the foldable Galaxy Z Flip and the Galaxy Fold.

Read more: In South Korea, Opaque Sect Draws Scrutiny With Virus Spike

(Updates with share action and plant resumption from the second paragraph)

To contact the reporters on this story: Sohee Kim in Seoul at skim847@bloomberg.net;Kanga Kong in Seoul at kkong50@bloomberg.net

To contact the editors responsible for this story: Peter Elstrom at pelstrom@bloomberg.net, Edwin Chan

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