Samsung has crashed out of China already. In subcontinent, the second largest smartphone market and it is also facing a decline. Chinese mobile vendors such as Xiaomi and Huawei are the easiest explanation for the declining market share of Samsung.
The organization now seems to have a new plan for reviving development and reclaiming lost glory. A recent Reuters report claims that Samsung wants to outsource to a Chinese original device manufacturer (ODM) a large portion of its smartphone manufacturing duties.
Samsung is reportedly planning to outsource one-fifth of its smartphone production to Wingtech in an effort to slash costs and lower prices. It means that Samsung will no longer make these in-house phones and that Wingtech will take on both manufacturing and development duties. Wingtech also produces equipment for the likes of Xiaomi and Huawei, Samsung’s two companies plan to take on this push
Citing sources, Reuters reports that next year, out of a total target of 300 million devices, Samsung plans to ship 60 million ODM-made smartphones. That’s a big 20 percent of the company’s total stock of smartphones.
Survival of the fittest
“This is not a good strategy, but an inevitable strategy,” a source with knowledge of the Chinese operations of Samsung told Reuters. Wingtech could cost Samsung almost 30 percent off the part. This would allow the company to pass on the benefits in the form of cheaper devices to customers.
Should consumers worry?
“To stay competitive with Huawei and other Chinese handset makers, it’s important to cut costs,” a Samsung source told. Cutting costs, however, may mean lowering product performance.
Sources said that the performance and layout will be strictly monitored. However, the outlet was told by a person familiar with Chinese ODMs that these companies tend to cut steps out of the manufacturing process, potentially reducing phone quality.
Some of its phones, like China’s Galaxy A6S, are made by ODMs. If the extension of the ODM strategy works for the company, its ability to launch more devices across price segments could be further improved.