If you own a Samsung smartphone, there’s a good chance the device was made in a factory in Vietnam. That, however, is likely to change going forward. Samsung reportedly wants to reduce its dependence on Vietnam for the production of new devices. According to The Elec, the company is looking at India and Indonesia as alternative production hubs in Asia, with India likely to gain the most from a potential move. The plan reportedly involves reorganizing production capacity across seven different manufacturing facilities spread across Asia.
As of 2021, Vietnam accounts for 60% of Samsung’s global smartphone production capacity, followed by India at 20%, and Indonesia at 4%. The company owns two production facilities in Vietnam that have a combined production capacity of 182 million smartphones a year. By next year, Samsung aims to bring this number down to 163 million smartphones per year.
In comparison, India — where Samsung operates a single factory — currently churns out 60 million units a year. By 2022, Samsung wants to increase that figure to 93 million units a year. This makes sense since Samsung’s production facility in India is claimed to be the world’s largest mobile factory. It was inaugurated in July 2018.
Before the pandemic hit, Samsung was on course to increase the production capacity in India to 120 million units. That, however, did not happen, and it seems Samsung is settling for a much lower figure of 93 million units a year in India in the immediate future. By the end of 2022, Samsung wants to make 19 million more units in India. As for Indonesia, where Samsung makes 10 million units per year, Samsung aims to increase the output to 18 million units a year.
Once Samsung completes this restructuring process, Vietnam will still account for 50% of its smartphone production. India will increase its share to 29%, while Indonesia will see a marginal increase to 6%. Samsung has earmarked a total of $140 million to facilitate this expansion — with $90 million going to India and $50 million headed to Indonesia.
Samsung’s decision to reorganize its manufacturing strategy is largely the result of increasing labor costs in Vietnam, the report adds. The company was also hit badly by COVID-19-induced lockdowns in Vietnam, which led to prolonged factory shutdowns.
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