Samsung to outsource production of low-cost smartphones

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Samsung ODM Outside China

Samsung is still the top mobile brand in the world. We don’t think Huawei will get to take over the brand anytime soon especially now that it’s been facing challenges in the United States. To be fair, Huawei is already in second place even without a smartphone market in the US. Sure, Honor phones are sold there but they are not enough to say Huawei has a big audience in the country. As for Samsung it still needs to make adjustments in its business strategies if it wants to remain in the business.

Samsung’s growth in the mobile market has been stagnant. It still sells millions of phones but the Chinese OEMs are quick to get some of its shares. It’s not just competing with Huawei but also other phone brands like Xiaomi. It now competes with low-cost challengers so it must rethink its strategy.

Samsung has a smartphone factory in China mainly for the Galaxy A models. Last October, it shut down the factory to move outside China to smaller contractors like Wingtech. Samsung isn’t making official announcements or showing the numbers but others are saying the company is planning to ship 60 million devices made in China by ODMs in 2020. The number is out of the 300 million units Samsung is expected to ship out.

Like Xiaomi, OPPO, and Huawei, Samsung’s use of Wingtech as ODM may reduce production costs. Usually, such contractors can produce phones quickly and they can deliver on time. As for quality, Samsung may have to look into control since production is already being outsourced. It doesn’t want another Note 7 fiasco.

Samsung has to make an important decision here especially if it’s about the budget and mid-range series of phones. We believe the premium Galaxy smartphones will still be manufactured in South Korea so it can manage quality control and quality assurance.

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