Samsung Relocating Production To Reduce Costs
Samsung logo at Samsung Customer Service Center in Krakow, Poland on 11 January, 2019. (Photo by Beata Zawrzel/NurPhoto via Getty Images)
The world’s leading smartphone manufacturer Samsung is moving its production across Asia in order to benefit from lower labor costs in different countries. Samsung will probably be too expensive to manufacture in Vietnam, so they are moving.
As the Korean portal The Elec reports, Samsung wants to slowly but surely relocate the production of its smartphones to India and Indonesia in order to save labor costs. So far, around 60 percent of all Samsung smartphones are still being built in Vietnam, including the high-end Galaxy S and Galaxy Z product lines.
Samsung now plans to take around 140 million dollars to build more devices outside of Vietnam, because the average wages in the company’s plants in the country are reaching a level that the group no longer wants to pay. From 2022, production capacities will therefore be increased in India and Indonesia, with the subcontinent increasingly becoming a manufacturing location.
Vietnam’s share drops to 50%
Samsung currently builds around 60 million smartphones per year in India, but up to 93 million units are expected to come from there as early as 2022, which corresponds to an increase of over 50 percent. The Samsung plant in Indonesia, on the other hand, will soon build around 18 million units a year instead of around 10 million units. At the same time, the share in Vietnam is falling, where 182 million devices are still being built annually in two plants.
In 2022 there should be only around 163 million units from Vietnam so that the share of the country in the total amount of Samsung smartphones produced worldwide will be “only” 50 percent. India’s share, on the other hand, increases from 20 to 29 percent, while Indonesia increases from four to six percent.
In addition to rising wage costs, the sources of the report from South Korea also cite the temporary closings of the two large Samsung smartphone plants in Vietnam caused by the spread of the coronavirus as a reason for the expansion of capacities in other countries. Samsung wants to reduce its dependence on Vietnam as the most important location for smartphone production in order to be able to cushion problems more easily.
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