Due to the pandemic and cost increase in Vietnam
Samsung is planning to restructure its global smartphone production next year.
It is planning to shift some of its smartphone production capacity at Vietnam to India and Indonesia, according to the company’s reorganization plan obtained and seen by TheElec.
The plan includes its aim of reorganizing its product capacity at seven manufacturing sites, located in South Korea and abroad.
Samsung currently has the capacity to manufacture 182 million units of smartphones a year at its factories in Vietnam.
19 million units of that will be moved sequentially to India and Indonesia, where the company is planning to expand manufacturing facilities.
Samsung has two smartphone factories in Vietnam, one at Bac Ninh province (called SEV) and Thai Nguyen province (called SEVT).
These together had an annual capacity of 182 million units as of last year, accounting for 61% of Samsung’s total smartphone production.
The facilities, as of November, still accounted for around 60% of the company’s total smartphone production.
Samsung is aiming to reduce this to around 50%, or around 163 million units per year.
At the same time, the company will expand its production capacity at its factory in India to its current 60 million units per year to 93 million units per year by 2022.
Its factory at Indonesia will be expanded from 10 million units per year to 18 million units per year over the same time period.
Samsung is planning to spend US$140 million for this expansion plan __ US$90 million in India and US$50 million in Indonesia.
Once the restructuring is complete, Vietnam will account for 50% of Samsung’s smartphone production; India will account for 29% and Indonesia 6%.
Currently, Vietnam accounts for 60%, India 20% and Indonesia 4%.
Sources said Samsung was commencing this reorganization due to increasing labor costs in Vietnam.
It was also due to the pandemic that shut down its facilities in Vietnam earlier this year and the tech giant wants to reduce is reliance on its facilities there, they said.
A Samsung spokesperson declined to comment on the matter.