SAMSUNG IS GOING TO MOVE THEIR PRODUCTION
Electronics company Samsung Electronics is reportedly going to change its mobile phone production strategy globally. The South Korean vendor is said to be moving its smartphone manufacturing base in Vietnam to another country. According to a report from South Korean local media, The Elec, the countries that are said to be the location of Samsung’s “new” factory from Vietnam are Indonesia and India.
In Vietnam, Samsung has two factories located in Bac Ninh Province (SEV) and Thai Nguyen Province (SEVT). Producing 182 million units of smartphones per year, or 61 percent of Samsung’s total production.
Samsung wants to cut production capacity at the Vietnamese factory to 163 million units per year. Or 50 percent of Samsung’s total mobile phone production. Later, as many as 19 million units of the total capacity will be moved gradually to Indonesia and India. In Indonesia, Samsung has a smartphone and tablet factory in the Jababeka industrial area, Cikarang, Bekasi. The factory which was inaugurated in 2015 has an investment value of US$20 million – 23 million.
When it was inaugurated in 2015, Samsung’s smartphone factory in Cikarang had 14 production lines with a production capacity of around 1 million units. 1.5 million units per month, or approximately 10 million units per year.
The Elec describes that Samsung plans to increase the production capacity of its factories in Indonesia from 10 million units to 18 million units per year. Reportedly, Samsung has allocated US$140 million (approximately Rp. 1.9 trillion) for this manufacturing transfer, of which US$90 million (around Rp. 713.4 million) for Indonesia.
Indonesia will contribute to it
Later, after the entire transfer process is completed, it is said that Indonesia will contribute 6 percent of the total production of Samsung phones. This figure is an increase from today, where Indonesia only accounts for 4 percent of Samsung’s total production and India 20 percent.
According to an unidentified source by The Elec, the transfer of manufacturing from Vietnam was partly due to rising labor wages in the country. In addition, the pandemic that made many Samsung factories in Vietnam closed at the beginning of the year was also another reason.
“In Vietnam, production was disrupted in certain places due to the regional quarantine which affected our operations,” said Kim Sung-Koo, vice president at Samsung Mobile Communications Business when announcing the results for the second quarter of 2021 last July, reported by The Korea Times.
Samsung also wants to reduce the concentration of production in Vietnam. Unfortunately, Samsung representatives have not responded to this news. According to TrendForce, Samsung plans to produce 276 million smartphones by 2022, up 1.1 percent from 2021.