On Sunday, TechCrunch reported Samsung announced plans to open a $500 million production facility in India. The South Korean conglomerate will manufacture smartphone displays and other electronic components at the plant.
The corporation will build its new factory in Noida, a city where the firm opened a $700 million factory in 2018.
Why Samsung is Building a Second Facility in India
Samsung is expanding its manufacturing and presence in India for a few interrelated reasons.
First off, the firm expects the global 5G deployment to spike smartphone sales worldwide. Indeed, chipmaker Qualcomm forecast shipments of 225 million 5G devices in 2020 alone. Moreover, the corporation saw better than predicted sales of the fifth-generation handsets it released last year. As one of the world’s preeminent manufacturers of mobile device screens, the company needs to ensure it has enough capacity to meet demand.
There are also specific advantages to building out its business in the Southeast Asian nation. As Samsung already owns land in Noida, it doesn’t have to waste time consulting with surveyors and regulators. In addition, India has offered the corporation tax breaks that make it an ideal location for another production facility.
Furthermore, Samsung wants to expand its presence in the world’s second-largest smartphone market. Until recently, the South Korean conglomerate dominated the Indian mobile device sector. However, in recent years, Chinese-based manufacturers have chipped away at its market share. By establishing a new factory in-country, the electronics firm can cut down on its supply chain costs.
Samsung’s Recovery Strategy
After struggling with four consecutive unprofitable quarters, Samsung looks to make a major come back this year.
The corporation looks to affirm its place as the world’s largest smartphone manufacturer by introducing two appealing flagships in the coming months. The firm will reportedly unveil the Samsung Galaxy S20 next month, a 5G device that features a 108-megapixel camera. Also, the company plans to release a successor device to its very popular Galaxy Fold. Though the latter handset had a rocky launch, it became a best-seller for the conglomerate.
Samsung has also recently taken steps to reduce inefficiencies, prepare for the future, and expand its offerings.
In October, the corporation shuttered its last remaining Chinese-based production facility after its local market penetration fell to an untenable level. Two months later, the firm outsourced around 20 percent of its smartphone production to low-cost original design manufacturers. Last month, Bloomberg reported Samsung would spend $116 billion to develop an extreme ultraviolet lithography technology to facilitate the production of custom enterprise processing chips.
Besides, earlier in January, the firm bought a Virginia-based 5G infrastructure company called TeleWorld Solutions. As such, the corporation will be able to better capitalize upon the 5G deployment using its new subsidiary’s technology.
Samsung’s decision to open another smartphone plant in India is another step on its road to recovery.