Samsung’s plan to outsource a 5th of its smartphone production to China subsequent year might assist it to compete with low-cost rivals similar to Huawei and Xiaomi; however, it’s a method fraught with dangers, people, with an awareness of the transfer stated.
Samsung Electronics, which shut its final in-home Chinese smartphone manufacturing unit in October, is moving production of some Galaxy A models to contractors akin to Wingtech, which are little identified China outdoors.
Samsung has been coy concerning the volumes involved; however, sources mentioned the South Korean tech large plans to ship some 60 million telephones made in China by so-known as unique design producers (ODMs) next year out of a complete of about 300 million units. Wingtech and different ODMs make phones for a number of brands – including Xiaomi, Huawei, and Oppo giving them the economies of scale to maintain prices down, and the nimble contractors can develop and produce new price range phones quickly.
Critics of Samsung’s technique say it dangers losing management of quality and undermining its manufacturing experience by outsourcing and should even assist rivals by giving contractors the additional quantity they should lower prices extra for all.
Samsung can ill afford one other quality crisis. It loses its flagship Galaxy Note 7 in 2016 after experiences the costly telephones have been catching hearth and delayed the launch of its folding cellphone this year after display screen defects have been identified.
However, with margins razor-thin for price range smartphones, people aware of Samsung’s technique say it has little choice, however, to comply with rivals and use Chinese ODMs to shave prices. US rival Apple outsources production to Taiwan’s Foxconn Technology, which has factories in China; however, Apple nonetheless designs its phones in California.