Samsung's Handset Manufacturing Facilities ...
The 2nd largest handset manufacturer produces handsets in 7 facilities in 5 countries:
Planned 2010
Facility Production Portion
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1. Gumi,S.Korea 59.4m 22%
2. Huizhou, China 72.9m 27%,
3. Tianjin,, China 70.2m 26%
4. Shenzhen, China 7.0m 3%
5. Vietnam 37.8m 14%
6. Brazil 19.0m 7%
7. India 10.0m 4%
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Total: 270.0m 100%
>> Samsung Boosting Handset Output in China to Beat Nokia
Kim Yoo-chul
The Korea Times
03-22-2010
koreatimes.co.kr
Samsung Electronics plans to produce over half of its mobile handsets at its three Chinese facilities this year.
For better logistics and labor costs, the world's second-biggest manufacturer of mobile phones is giving more responsibility to its Chinese affiliates, while the company is leaning toward high-end and pricy phones for its local line, officials told The Korea Times Monday.
According to Samsung and industry officials, it has been set to make over 210 million units or some 80 percent of the total outside South Korea in 2010.
Shin Jong-kyun, president of Samsung's telecommunication division, which is in charge of mobile phones, earlier said the company will sell a maximum 270 million handsets including 18 million smartphones by the end of this year.
Samsung's factory in Huizhou, China, is expected to produce 72.9 million units (27 percent), while another China-based factory in Tianjin will manufacture 70.2 million (26 percent).
The other Chinese facility in Shenzhen will produce some 7 million handsets, the officials said.
A plant in Vietnam will handle 37.8 million units (14 percent), while 59.4 million (22 percent) will be produced from the local line in Gumi, North Gyeongsang Province. Lines in Brazil and India will produce 19 million and 10 million, respectively.
Over the past five years, the proportion of Samsung's mobile handset output that has been manufactured overseas has risen dramatically.
The consumer electronics giant is seeking to cut costs and use these savings to invest in the development of new technologies such as touch-screens and powerful mobile software used to drive the devices' operating systems.
It can be used to compete with other international brands such as Nokia, Apple of the United States and Research In Motion (RIM) in Canada.
Samsung's proportion of overseas mobile phone production is forecast to reach a record 78 percent throughout this year. The proportion has steadily risen from 25 percent in 2005 to over 70 percent in 2009, they said.
"The biggest change was that Samsung has given more production authority to its Huizhou affiliate. Better cost cuts in logistics and labor had been the top considerations," a high-ranking industry official said.
Samsung Goes South
Samsung Electronics has lowered its portion of mobile phone production in Tianjin to 26 percent from last year's 33.5 percent. In contrast, the company raised the levels in Huizhou and Vietnam, respectively.
"Due to cost factors, Samsung's key lines in mobile phones are going to the south. Better prices for labor and logistics mean better cost competitiveness, boosting edges in low- and mid-tier phone segments," a Samsung official said, asking not to be identified.
Huizhou is a city located in central Guangdong Province. The city looks out to the South China Sea to the south, while the city Tianjin is near China's capital city of Beijing.
Officials say an increased output plan at its factory in Vietnam has also been matching Samsung's realignment moves in production.
Last October, Samsung opened a $700 million manufacturing plant in the northern province of Bac Ninh, Vietnam. It is its first foreign-owned handset factory and the 7th Samsung plant operating outside South Korea.
The factory's estimated production capacity in 2009 was 1.5 million units per month, however, that will increase to 6 million per month by 2010, and 9 million by 2011, according to representatives.
"It's natural to give more authority in production to regions that have competitive edges in costs as Samsung has been expanding its output in the global market," a company spokesman said.
Its local line is handling high-end and pricey phones such as AM OLED-embedded devices. Samsung is pushing for the so-called AM OLED phones to emerging and some of developed markets.
The company has a plan to ramp up the production of AM OLED-embedded smartphones domestically, though the chief of its phone business Shin Jong-kyun declined to comment.
"By sending most of its production outside South Korea, Samsung is managing to keep costs low enough to appeal to consumers while keeping its profit margins healthy by selling premium devices in developed markets such as North America and Western Europe," So Hyun-chul, an analyst at Shinhan Financial, said.
Nokia in its Sights?
Analysts and Samsung officials say the transitional efforts will help the handset powerhouse narrow the market gap with the Finland-based Nokia.
Last year, Nokia sold 431.8 million handsets worldwide, taking up 38.2 percent of the market share. But this was a decrease of 1.6 percent from the previous year, according to research firms.Samsung, however, saw a 3.3 percent increase to 20.1 percent during the same period.
"Samsung is injecting more resources for its smartphone-related sectors. But at the same time, it is concentrating on shipping more feature phones for bigger shares," the company official added. It lagged with its fewer smartphone offerings, but has vowed to attack the market aggressively in the U.S. and elsewhere.
Samsung is hoping to pick up smartphone market shares from faltering Motorola, but the U.S. company itself has been waging a comeback of sorts with its new Android handsets.
Unfortunately, it only has a 3 percent of share in the smartphone market, according to recent reports.
From 2005 to 2009, Samsung's overall mobile phone shipments grew by 101 percent from 103.8 million units in 2005, according to BMI research.
The company expects to raise its global market share from 21 percent to around 23-24 percent. Meanwhile, Nokia's market share is predicted to remain between 37 percent and 38 percent level in 2010.
Lee Seung-hyuck, an analyst at Woori Investment, expects Samsung will take up a record 21.5 percent of global shares in the first quarter of this year by shipping 63 million handsets during the January-March period. ###
- Eric - |
