Samsung outsources more smartphone production to Chinese manufacturers
Samsung is set to increase its smartphone production outsourcing to Chinese original device manufacturers (ODMs) and joint device manufacturers (JDMs). This production strategy, which has been in place since 2019, is only for the design and production of some of the lower-cost phones, rather than high-end devices. According to Korean news outlet The Elec, Samsung's outsourced smartphone production will rise from 44 million units in the previous year to 67 million units this year.
Outsourced production to constitute 25% of Samsung's goal
The increase in outsourced production means that these smartphones will make up 25% of Samsung's projected production target of 270 million units by 2024. In addition to increased reliance on Chinese companies, Samsung will outsource the production of 28 million units to factories in Vietnam.
Risks and rewards of outsourcing strategy
While the outsourcing strategy could potentially lead to more competitively priced budget phones, it also carries the risk of producing lower-quality devices if ODM partners compromise on quality for profit. The Samsung Galaxy A03s, an outsourced phone, has been praised for its good battery life and several quality-of-life improvements. However, it has also faced criticism for its cheap construction and laggy performance.
