The past few years have witnessed occasional disruptions in the handset supply chain, leading to the largest scale of production relocation ever seen in decades. In this context, Samsung Electronics is looking for a regionalized production for local markets in all geographies, says DIGITIMES Research.
According to Yen Chou, an analyst and project manager at DIGITIMES Research, Samsung's proprietary manufacturing facilities in Vietnam, namely SEV and SEVT, which make handsets from low to high-end, serve as the central hub for handset production. These facilities produce more than half of the handsets manufactured in Vietnam, many of which are subsequently exported worldwide. On the other hand, Samsung's Gumi factory in South Korea primarily produces the flagship S-series and foldable phones for the South Korean market, as well as some markets in Europe, the US, and Japan.
Samsung's manufacturing facilities in emerging markets predominantly cater to local or regional demands. The handsets produced at Samsung's facility in Indonesia are tailored to meet the specific needs of the Indonesian market, and those made from the SEDA-P facility located in Brazil are for markets in Latin America. Meanwhile, Samsung's SIEL facility in India previously made low to high-end handsets for the South Asian country, now Samsung exported products made at SIEL to countries in the Middle East, Africa, and European countries, such as the UK and France.
According to Chou, Samsung began shipping overseas from the Indian facility in 2022, albeit in a small quantity. Nonetheless, DIGITIMES Research observed records of handset exports from Samsung's Indian facility, including A-series, such as A53 and A33, to Asia, African, and European markets, and S22 Ultra exports to Middle East countries.
As Chou indicated, due to Samsung's priority on meeting local demands and limited exports from its Indian facility, Samsung was easily surpassed by Apple as iPhone assemblers, such as Foxconn and Pegatron, scaled up their production capacity in India.
Samsung has long outsourced parts of its handset manufacturing to Indian partners, such as MCM in 2015 and Dixon in 2020. Meanwhile, China-based EMS providers joined the ranks of making Samsung's handsets as late as 2019, including A10s and M01s models. Samsung only outsources low-end 4G smartphones to its India-based and China-based partners operating in India.
Notably, Chou observed that Samsung has been ramping up its reliance on Indian EMS suppliers for handset production since 2021 while simultaneously scaling down its partnerships with China-based EMS providers operating in India. The shift in Samsung's reliance on EMS players may be attributed to the pandemic, the Indian government's stance on Chinese manufacturers, and the improving manufacturing quality of Indian EMS providers.
Should Samsung's Indian partners consistently deliver on improving its quality and quantity, Chou anticipated that Samsung's exports from India could experience growth in the coming years.
Samsung's handset manufacturing (in million units) | ||||
Facilities | Year of production | 2020 | 2023(f) | 2026(f) |
Gumi, South Korea | 2010 | 20 | 20 | 62 |
SEV, Vietnam | 2009 | 82 | 47 | 46 |
SEVT, Vietnam | 2014 | 100 | 70 | 81 |
SEDA-P, Brazil | 2014 | 28.8 | 23 | 28.8 |
SEIN, Indonesia | 2015 | 9 | 10 | 53 |
SIEL, India | 2018 | 60 | 60 | 108 |
Outsourcing | 2019 | 55 | 40 | Unknown |
Source: DIGITIMES Research, September 2023
About the analyst
Yen Chou received a master's degree from the Graduate Program for Political Economy at National Cheng Kung University. He worked as an assistant researcher at the Institute for Physical Planning and Information and as an analyst at DIGITIMES Research. His research focuses on Samsung's global investment and operation, the electronics industry in Vietnam, and the display industry in South Korea.
Credit: DIGITIMES Research
