Samsung Looking at Chinese ODMs to Produce Cost Reduction
October 14, 2019
Samsung Electronics is looking to reduce the cost of producing smartphones and is taking a number of steps, including closing its assembly plant in China and outsourcing development to using and ODM approach. South Korea’s Smartphone parts manufacturers reacted quickly to the news and are preparing a response to the plan, which will change the current positions of Samsung Electronics’ “partners” since an outsourcing company will be responsible for design, parts, and assembly.
A group of Samsung Electronics’ partners formed a task force (TF) last month to look to respond to Samsung Electronics plan. to release more smartphones based on ODMs and it will analyze each major part made using the new approach. “This is the first time for a TF to work with Samsung Electronics in more than ten years.” said a representative for a Smartphone parts manufacturer. Samsung Electronics’ partners are collaborating to prepare a countermeasure because they believe that this recent move by Samsung Electronics will have huge impact on their businesses. Some companies are looking to deal with Chinese ODM companies that are producing Samsung Electronics’ Smartphones and have started discussions with Chinese companies. The Chinese ODM are also looking for partners from South Korea. Samsung Electronics could reduce its production cost by 8% by using ODM’s. Samsung started the process by designing and manufacturing the mid-range Galaxy A10 using the ODM method.
The “partners” formed a TF and are actively looking to deal with Chinese ODM companies as Samsung Electronics will continue to release more Smartphones based on ODM method. “ … Samsung Electronics is having a difficult time competing against others within Chinese market as it decided to pull out from its factory in China.” said the CEO of a Samsung Electronics’ current partner. “We think that Samsung Electronics is pushing for ODM method because low-end Smartphones involve fierce competitions for lower price. Because we have most of our factories in Vietnam, we can have better competitive price than Chinese Smartphone parts manufacturers.” said the CEO of a different Samsung Electronics’ partner. “If we are able to gain more competitiveness, Samsung Electronics will be able to produce more Smartphones on its own once again.” Samsung Electronics introduced its current partners to Chinese ODM companies to encourage collaboration between Chinese companies and South Korean companies. Samsung Electronics is planning to produce about 30m phones this year and 60m next year using ODMs and can increase the number to 80m, if required. Staff Reporter Yun, Geonil | firstname.lastname@example.org