If you bought a premium Samsung smartphone recently, there’s a good chance that your product originated in Vietnam. According to South Korean media platform TheElec, a little over 60% of Samsung’s global production comes from its two massive factories in Vietnam – on Bac Ninh province (called SEV) and Thai Nguyen province (called SEVT). TheElec reported that some of those production numbers are likely to shift out of Vietnam. India is likely to be the biggest beneficiary, giving a push to the government’s Make in India initative.
Samsung has not confirmed this report and it’s early to tell if this could bring down India costs of premium devices. Import duties alone don’t determine costs, the other factor is the supplier ecosystem within India for some of the brand’s more cutting edge smartphones like the flagship S series or its pioneering range of foldables.
TheElec pegs the Vietnam production numbers at 182 million units for 2020 accounting for 61% of Samsung’s total smartphone production. The corresponding figure for 2021 is likely to be 60%. Rising production costs in Vietnam might see Samsung reduce this figure to 163 million units or 50% of its total production. Indonesia and India are likely to benefit from this cutback. The India figures are likely to zoom from 60 million units to 93 million units per year by 2022. We’ve already seen quite a few recent 5G-ready devices like the Galaxy F42 and the Galaxy M32 5G roll out from the India facility.
Samsung’s Noida facility – the largest mobile plant in the world was established in 2018. In June 2017, Samsung announced an investment of Rs 4,915 crore to add capacity at the Noida plant under the Uttar Pradesh government’s Mega Policy. This investment was planned to increase production capacity from 68 million to 120 million. While the Make in India thrust may be a 2010s phenomenon, Samsung has been manufacturing mobile phones in India since 2007.
According to TheElec Samsung will invest $90 million in India as part of its production expansion plan. This will see India’s share rise from 20 to 29%. In August the Economic Times reported that Samsung was the only one of 16 companies that met its FY21 target under the production-linked (PLI) scheme for handsets that make it eligible for sops. According to the report Samsung hit the ceiling of Rs 15,000 crore worth of phones priced at over Rs 15,000 (factory value) during FY 2020-21 and exported phones worth about Rs 13,850 crore.
While Samsung hasn’t confirmed TheElec report, it’s certainly good news for the smartphone industry and ecosystem in India. On the one hand is the prospect of lower import duties that could trickle down to consumers but the bigger picture is the development of the entire supply chain within India. The Samsung R&D Institute India-Bangalore (SRI-B) is the largest R&D Centre outside of South Korea and a key innovation hub in the Samsung group. This centre has been working on key innovations in the iOT space and AI domain. Could be soon see India emerge as the key smartphone manufacturing hub for Samsung and other brands even as AR and newer innovations look to redefine the smartphone experience as we know it.