Because of the whole pandemic, companies have suffered huge losses. There is a chip shortage, then there is parts shortage and many other problems. Companies are looking to cut corners to survive. While others want to increase the manufacturing capacity. However, Samsung is planning to shift some of its production from Vietnam to India and Indonesia. Why are they doing it? Why is Samsung manufacturing in India or Indonesia? Here is everything you need to know.
Samsung manufacturing in India
Samsung Electronics plans to reorganize the production capacity of its production bases at home or abroad starting next year.
Last year, Samsung’s annual production capacity of the two Vietnamese factories was around 182 million units. It accounted for approximately 60% of Samsung’s total production of smartphones. Samsung wants to reduce this percentage by 10% to be at least 50%.
According to Samsung’s strategy, the production volume of around 19 million units from the Vietnam factory will be transferred to start manufacturing in India. Further, it is planned to expand the annual output of the Indian plant. From the current 60 million units to 93 million units by the end of 2022.
Samsung manufacturing in Indonesia
Around 10 million units are being produced by the Indonesian plant currently. Samsung plans to increase that to around 18 million. Once the rearrangement is completed, the Indonesian factory will increase from the current 4% to 6% production share.
Why is Samsung manufacturing in India or Indonesia?
The simple answer here is to cut the costs. According to sources the labour costs and other essentials are a lot more expensive in Vietnam than in India or Indonesia. At the same time, due to the epidemic earlier this year, the company closed its factory in Vietnam. It at once restricted the company’s production capacity. Samsung wants to branch out so that if one place sees some unfortunate conditions, other factories don’t stop and the production can continue.
Adding to that, the labour cost in India at the time of writing is around 1.7 USD while in Vietnam it’s almost double at 2.5 USD.
So, what do you guys think of Samsung manufacturing in India or Indonesia? Share your thoughts in the comments below.
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