Uncertainty of closing overseas manufacturing bases
Re-shoring as a special measure for supply chain management
Transfer of two production lines to the Gumi plant
Securing stocks and maximi
Samsung Electronics has moved its smartphone production line overseas to its Gumi factory. This is a special measure taken by the company after experiencing production setbacks at large factories in Vietnam and other countries following COVID-19. It seems that there has been a change in Samsung’s smartphone production strategy, which has prioritized efficiency and optimized the production system.
Late last year, Samsung Electronics moved part of its smartphone production line in Vietnam to the Gumi factory in North Gyeongsang province. After moving its manufacturing base overseas, it would be the first time that the Gumi plant would increase its production capacity.
Samsung Electronics produces about 300 million units of smartphones per year. BắcNinhand BắcNinh, the largest production bases in Vietnam, produces around 60% of Samsung’s total smartphones. India’s Noida plant also produces around 100 million units. Depending on local demand, factories in Brazil and Indonesia adjust their production.
The Gumi factory, which is Korea’s only smartphone production base, served as a manufacturing control tower to apply and test new processes upstream. The factory was exclusively responsible for domestic shipments of flagships such as foldable smartphones and the Galaxy S, but its share of total Samsung smartphone production has gradually declined.
The keynote has changed from last year as the shutdown of global manufacturing bases, including Vietnam, due to COVID-19 caused severe disruption in smartphone production. The company turned to “reshoring” to move overseas production lines to Korea as a special measure for supply chain management. Specifically, it is assumed that Samsung Electronics has realized the need to improve the level of supervision and management in the production of high-end smartphones, a key factor that greatly affects their brand credibility. Even at the cost of rising manufacturing costs, the production line was still moved to Gumi.
Most of the flagship Galaxy S22 series smartphones, which will be officially released on the 25th, are expected to be produced at the Gumi factory. In an effort to maximize sales volume, Samsung Electronics decides to freeze the factory price. It is also putting all its efforts into securing stocks to support this move.
Besides re-shoring in Gumi, Samsung Electronics manages the production volume of each of its overseas factories. By spreading Vietnam’s concentrated smartphone production around the world, they can minimize damage in the event of a factory shutdown in a specific region. Sources believe that Samsung Electronics is also banking on diversifying its global production capacity from its manufacturing plants to other major suppliers.
A local manufacturing official in Gumi said, “Towards the end of last year, Samsung Electronics moved two of its Vietnamese smartphone production lines to Gumi. It seems that domestic production will gradually increase.