In recent weeks, there have been various reports of Samsung reducing its production capacity in Vietnam due to the limitations of the Corona virus, and this has damaged the company’s sales by at least 5% in one of the markets. Now it seems that Samsung has decided to reduce the output of its Vietnamese factories and move some of these products to India and Indonesia.
The Korean news agency The Elec reports that the production of a maximum of 192 million Samsung smartphones will be transferred to the two countries. Of course, this transfer does not take place immediately and over a period of two years it is going to happen. In the first step in the first quarter of 2021, production of 19 million units will be entrusted to India and Indonesia. Then in the coming months the volume of production in these countries will increase.
India benefits the most from this strategy as orders from its factories increase dramatically. India is projected to produce about 93 million handsets by 2022; This figure is 33 million more than Samsung’s production forecast in India for 2021.
The South Korean tech giant will spend $ 140 million, of which $ 90 million will be spent in India and $ 50 million in Indonesia. By 2022, half of Samsung phones will be produced in Vietnam, 29% in India, 6% in Indonesia and the rest in other parts of the world. The countries currently account for 60%, 20% and 4% for Vietnam, India and Indonesia, respectively.
Samsung’s decision to split the supply chain in different countries is not surprising because the Koreans know that they will not have a serious problem in the event of a problem in one country. The company has long manufactured most of its handsets in Vietnam, but the Corona virus epidemic has prompted Samsung executives to adopt this new strategy.