Samsung reveals smartphone manufacturing strategy for India

Samsung phone factory IndiaIndia Prime Minister Narendra Modi and South Korean President Moon Jae will officially inaugurate Samsung Electronics’ manufacturing facility at Sector 81 in Noida, Uttar Pradesh, on Monday.

Samsung has shared details about the world’s largest mobile factory in India – that put Noida on top of the world manufacturing map for consumer electronics.

HC Hong, president and CEO, Samsung India, said a bigger manufacturing plant will help them cater to the growing demand for Samsung products across the country. Samsung lost its lead position to Xiaomi in India smartphone market.

Samsung India, that registered 27 percent growth in mobile business revenue for the financial year 2016-17 — accounting for a whopping Rs 34,300 crore of its reported Rs 50,000 crore sales – won’t be able to hide the smile when the new facility kicks off production from July 9, Monday.

HIGHLIGHTS

# Samsung to make phones at lower cost due to its scale
# Samsung to spend $716 million in three years
# Samsung to double its capacity for mobile phones to 120 mn units
# Samsung plans to export India-made handsets

One of the first electronics manufacturing facilities set up in the country in the early 1990s, the plant started by manufacturing TVs in 1997. Samsung added the current mobile phone manufacturing unit in 2005, IANS reported.

In June last year, the South Korean consumer electronics giant announced Rs 4,915 crore investment to expand the Noida plant and, after a year, the new facility is ready to double production.

Samsung, the second largest smartphone company in India behind China’s Xiaomi, is making 67 million smartphones in India. The smartphone manufacturing capacity of Samsung will grow to nearly 120 million mobile phones.

The expansion of the current manufacturing facility will also double Samsung’s production capacity of consumer electronics like refrigerators and flat panel televisions.

Tarun Pathak, associate director at Counterpoint Research, the new facility gives Samsung an advantage by reducing the time to market.

“This will help Samsung bring some local features to the devices powered by R&D here. Apart from this, the company can also bring in export opportunity for Samsung to SAARC and other regions,” Tarun Pathak said.

Samsung has two manufacturing plants — in Noida and in Sriperumbudur, Tamil Nadu — five R&D centres, and one design centre in Noida, employing over 70,000 people and expanding its network to over 1.5 lakh retail outlets.How Apple smartphone share dippedEstablished in 1995, Samsung India laid the foundation stone of Noida plant next year. In 1997, production commenced and the first television was rolled out. In 2003, refrigerator production began.

By 2005, Samsung had become market leader in panel TVs and in 2007, the existing Noida facility started manufacturing mobile phones.

In 2012, Samsung became the leader in mobile phones in the country and the Noida facility rolled out the first-ever Galaxy S3 device.

The company currently has over 10 percent of its overall production in India and aims to take it to 50 percent over the next three years.

“India is among the top five smartphone markets globally for Samsung. US is saturated and Korea and Brazil are not growing significantly. India is a big opportunity across price segments, including 2G feature phones. It makes sense for Samsung to build a bigger manufacturing base here,” Jaipal Singh, senior market Analyst, IDC, said.

“They are now looking at building a complete ecosystem. After smartphones, they can go into building top-of-the-line products in other categories like TVs, refrigerators as advance manufacturing in India still lags behind. With the new facility, Samsung is going to have an edge over its rivals,” Jaipal Singh noted.

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