How Samsung is upping its smartphone game against Chinese rivals

By Xite - November 18, 2019
Samsung is reportedly outsourcing a fifth of its smartphone production to China next year. The strategy, which is full of risks, may help the South Korean company compete with rivals such as Huawei an....

As the Chinese smartphone-makers rose to supremacy, Samsung’s dominance in the smartphone space took a hit. Thanks to the refreshed M-Series and A-Series smartphones, the South Korean giant has been able to get back some of the market share it lost to its Chinese counterparts. Handsets under these series being sold in segments that are dominated by the Chinese companies like Xiaomi, Realme and OnePlus. It seems that Samsung is not done yet and is planning to further up its game against the Chinese OEMs. 

Citing people familiar with the matter, Reuters reports that Samsung is planning to outsource a fifth of its smartphone production to China next year. This strategy, which is full of risks, may help it grab a lion’s share in the market, which is currently dominated by Xiaomi, Vivo, Oppo and Realme. ‘Samsung Electronics, which shut its last in-house Chinese smartphone factory in October, is quietly moving production of some Galaxy A models to contractors such as Wingtech, which are little known outside China,’ Reuters said.

If the report is to be believed, Samsung plans to ship some 60 million phones made in China by original design manufacturers (ODMs) next year. The South Korean company ships about 300 million devices each year. Wingtech and other ODMs manufacture phones for multiple brands, which include Huawei, Xiaomi and Oppo. This could help the company reduce the cost of production of its devices and eventually sell phones at more competitive prices.

Reuters cited critics who say that by adopting this strategy, Samsung might lose control of quality, and undermine its manufacturing expertise by outsourcing. This could also help rivals by giving contractors the extra volume they need to lower costs further. Manufacturing defects have already caused the Galaxy-branded smartphone maker a few problems in the past. In 2016, the Galaxy Note 7 disaster brought the company into people’s bad books. Similarly, manufacturing defects also caused a delay in the launch of the Galaxy Fold.

Meanwhile, Samsung has responded to the this development. ‘This is an inevitable strategy rather than a good strategy,’ a source with knowledge of Samsung’s Chinese operations, was quoted as saying. Samsung told Reuters that it has been making limited lines of smartphones outside its own plants to broaden its existing portfolio and ‘ensure efficient management in the market’.

  • Tags
  • Samsung
  • XIaomi
  • Realme
  • Oppo
  • Vivo