Samsung Electronics will reduce the number of smartphones its produce this year by 40 million units from its initial target, an adjustment caused by the impact of the COVID-19 pandemic, people familiar with the matter told TheElec on Friday.
The company initially set its smartphone shipment target at 280 million units earlier this year but this has been reduced by 15% to 240 million units, they said.
The new smartphone shipment target is also significantly lower than the 290 million units it shipped last year.
Its goal for the total number of mobile device shipment, which includes feature phones and tablets as wells, has been reduced from the initial 330 million units to 280 million units, they also said. Smartphone accounts for some 85% of the total number of mobile devices Samsung ship annually.
The adjusted goal is due the COVID-19 pandemic, which caused problems in production and contracted demand. In the first quarter, Samsung was hampered by the slowdown in production by its suppliers in China.
In the first half of the year, Samsung only produced around 100 million units of mobile devices __ both phones and tablets. In the first quarter it produced some 60 million units and in the second quarter 40 million units.
This is a 58% decline compared to the 171 million units it produced in the first half of 2019. In the first quarter of that year, it produced 83 million units and in the second quarter 88 million units.
Samsung is planning to produce 180 million units of mobile devices in the second half of the year to meet the new target. The company has recently notified its suppliers of the change of plan.
In July alone it plans to produce 33 million units, and 30 million units in each months that follow.
Out of the total, for smartphones, it plans to produce between 150 million units to 155 million units in the second half. It will need to churn out 25 million units per month to meet the new target. Back in April, when the affects of COVID-19 were at its peak, Samsung only produced 10 million units of smartphones that month.
Samsung has sent engineers continuously to Vietnam, where its biggest smartphone factory is located, to minimize possible contingencies. The factory there accounts for half of is global smartphone production. Samsung’s factory in India, which was shutdown during the early stages of the pandemic there, is recovering its production rate. The South Korean tech giant’s factory in Brazil is still facing problems, but production there accounts for little in its total smartphone production output.
Samsung is planing to run its handset factories in Gumi, South Korea and those in Vietnam and India at full capacity to meet the new shipment target, the people said.
The company is also utilizing its Chinese original design manufacturers (ODM) Wingtech and Huaqin. Smartphone shipments from the two are increasing. At one time, the two companies had their factory production rate drop to 50% in February and March, but this is recovering.
Meanwhile, Samsung sold a total of 343 million units of mobile devices __ smartphones, feature phones and tablets __ last year.