Big shift for Samsung's device business may bring more production outsourcing

Samsung's DX or Device eXperience business, which handles mobile devices, TVs, home appliances, etc, is facing intense cost pressures.

Samsung Electronics has reviewed the management strategy for this division during its global strategy council this week and we may now see a major shift in the strategy which may increase the outsourcing of certain products to third-party manufacturers.

Samsung has already done considerable restructuring to cut inefficient businesses. Its decision to completely exit from TV and home appliance sales in China was a result of those efforts.

The company faces strong competition from Chinese rivals in the home appliance segment. A report out of South Korea claims that Samsung will counter this by focusing more on its premium Bespoke lineups.

Samsung may also consider discontinuing or outsourcing the production of low value-added home appliances. This means that certain entry-level products may be made by third parties rather by Samsung in its own factories.

This is viewed as a sign that Samsung wants to shift away from its history as a pure hardware manufacturer to a more nimble entity that focuses more on segments in software, services, and new businesses where it doesn't face relentless competition on pricing.

These changes would also enable Samsung to improve the overall business, as a more nimble division would likely deliver improved financial performance and further compound the impressive gains that Samsung is currently making through its semiconductor division.