Samsung to make phones in Venezuela, Motorola to close Texas factory

Samsung Electronics expects to start production of cellular phones, tablets and home appliances in Venezuela during the second half of 2014.
Samsung and Venezuela in 2013 agreed to build the factory through a joint venture in which the company will hold 49 percent and the government will hold 51 percent.

Luis Cobo, vice president of Samsung Venezuela, said: “Initially it would be to meet domestic demand, but the idea is to export products.”

Possible sites for the factory are in the states of Falcon, Carabobo or Nueva Esparta, media reports said.

In February, the South Korean electronics group signed an agreement with the government of President Nicolas Maduro to sell the products under the country’s price control mechanism, which sets profit margins at a maximum of 30 percent of production costs.

Meanwhile, Motorola Mobility handset unit said it will close its Texas factory by the end of this year, barely a year after it opened as the first smartphone factory in the US.

Sales of its flagship phone, the Moto X, have been weak and the costs of running the plant are too high to keep operations going, Motorola Mobility spokesman Will Moss said. Singapore-based international contract electronics manufacturer Flextronics operates the plant.

Even though the concept of the smartphone was pioneered in the US and many phones have been designed here, the vast majority of phones are assembled in Asia.

The Texas factory has allowed Google to stamp the phone with “Made in the US,” although assembly is just the last step in the manufacturing process and accounts for relatively little of the cost of a smartphone. The cost largely lies in the chips, battery and display, most of which come from Asian factories.

The factory employs about 700 workers who assemble the Moto X smartphones for the US market, Moss said. He declined to comment on whether Motorola would retain the workers.

Google bought cellphone pioneer Motorola Mobility for $12.4 billion in 2012. Originally retailing the Moto X for $600, amid flagging sales, Google dropped the price to $399. Still, only a fraction of the units were sold compared to the Apple iPhone.

TelecomLead News Team