Desinicization
With the competitive landscape for smartphones changing from the premium to the low-end market, Samsung Electronics is stepping up its efforts to lessen its heavy reliance on the Chinese market.
According to industry sources on Oct. 22, Samsung is working to expand mobile phone facilities in the northern part of Vietnam with a US$3 billion (3.16 trillion won) investment. Experts are saying that Samsung's move is aimed at increasing price competitiveness by reducing manufacturing costs. It is also intended to accelerate the launch of a new offensive to dominate the rapidly-growing East Asian and Indian markets, in addition to the Chinese market.
The Korean tech giant already made an investment plan and asked the Vietnamese government to approve the plan. Samsung has production facilities in Bac Ninh Province and Thai Nguyen Province, where around 120 million mobile phones are manufactured per year.
So far, the largest Android phone maker has invested US$2.5 billion in Bac Ninh Province and US$2 billion in Thai Nguyen Province. An additional US$3 billion investment in these areas is likely to greatly increase the number of mobile phones produced in Vietnam. Considering that Samsung produces 450 million to 500 million mobile phones each year, almost half of Samsung phones are expected to be made in Vietnam in the future.
Samsung phones are also produced in facilities in Gumi, Korea; Tianjin and Huizhou, China; Campinas, Brazil, and Noida, India.
If manufacturing output increases in Vietnam, factories in China will produce a decreasing number of mid to low-cost smartphones.
Samsung is also discussing a measure to build mobile phone facilities in Indonesia with the Indonesian government.
The company is working to set up large electronics facilities in Ho Chi Minh City as well, with a US$1.4 billion investment. It is also planning to invest about US$500 million in existing facilities in Ho Chi Minh City to produce TVs.