Samsung to suspend operations at mobile phone plant in China

Samsung Electronics, the largest smartphone maker, is considering suspending operations at one of its mobile phone manufacturing plants in China due to drop in sales and increase in labor costs, Reuters reported on Monday.
Smartphone makers in China in Q2 2018
According to the above chart prepared by Canalys, top smartphone makers in China in Q2 2018 include Huawei with 27 percent share, OPPO with 20 percent, Vivo with 20 percent and Xiaomi with 14 percent share in Q2 2018.

Samsung Electronics, which faces competition from Huawei, Xiaomi and Apple globally, may stop manufacturing mobile phones this year at Tianjin Samsung Telecom Technology, located in the northern Chinese city of Tianjin, the Electronic Times, the South Korean newspaper said.

The world’s biggest smartphone maker said on Monday that nothing had been decided on the fate of its Tianjin operation.

“The smartphone market is having difficulties due to slowing growth. Samsung Electronics’ Tianjin telecom enterprise aims to focus on activities that increase competitiveness and efficiency,” it said in a statement to Reuters.

Samsung had 20 percent of the China smartphone market five years ago. Samsung’s China shared dropped to less than 1 percent this year, outgunned by Huawei, Xiaomi and other Chinese brands, particularly on pricing.

The South Korean tech giant is also under pressure to jump-start faltering smartphone sales after posting its slowest quarterly profit growth in more than a year, as rivals nip at its heels with cheaper, feature-packed models.

In addition to the Tianjin plant, Samsung has another phone manufacturing factory in Huizhou.

Samsung has focused its major mobile phone investments on production facilities in Vietnam and India in recent years. Samsung opened the world’s biggest smartphone factory near New Delhi last month, which is slated to become an export hub.

Samsung’s Tianjin smartphone manufacturing plant in China produces 36 million mobile phones a year and its Huizhou plant makes 72 million units a year, while the two factories in Vietnam combined make 240 million units a year, according to the Electronic Times.

Samsung Electronics recently announced huge investments in AI, 5G, IoT, among others, to boost innovation and leadership.