Samsung’s smartphone business has been facing an existential crisis in China with the company’s market share falling below 1% in recent quarters. Though the company has vowed to fight back on numerous occasions and undertook many measures, it has failed to make any perceptible gains so far in the world’s largest smartphone market.
This decimation was bound to have consequences on Samsung’s phone manufacturing operations in the region. There were reports a few months back that the Korean giant is contemplating closing down the Tianjin plant in China due to rising labor costs and lackluster sales. In line with the reports, Samsung announced yesterday that it would shut down the Tianjin phone plant by the end of this year.
“As part of ongoing efforts to enhance efficiency in our production facilities, Samsung Electronics has arrived at the difficult decision to cease operations of Tianjin Samsung Electronics Telecommunication,” Samsung said in a statement.
Will continue to operate the second plant
The company said it would offer compensation packages and transfer opportunities to the ~2,600 employees affected by this move. It also confirmed that its other phone manufacturing plant in Huizhou in Guangdong province would remain operational.
Though Samsung has not disclosed the production capacity of these plants, media reports from Korea place it at 36 million phones per year for the Tianjin plant and 72 million units for Huizhou plant.
Samsung has moved much of its smartphone manufacturing to countries like India and Vietnam in recent years. To avoid the rising import costs and stay competitive in the price-sensitive Indian market (where the company is still a dominant player), it opened the world’s largest mobile factory there in July this year.