According to South Korean publication ETNews, Samsung’s ODM business approach in China might pay off by the end of the year. The source estimates that out of 300 million smartphones expected to be shipped by Samsung this year, 30-to-40 million units will be manufactured by an ODM.
Meanwhile, the publication also cites research firm IHS Markit who isn’t as confident in Samsung’s results but still estimates that the number of Samsung smartphones manufactured by ODMs will increase to 8% (roughly 24 million units) in 2019, up from 3% last year.
ODM phones may help Samsung regain lost market share in China
News that Samsung might turn to ODMs to manufacture smartphones for the Chinese market first emerged last September. Roughly one month later, the company launched its first ODM device exclusively in China under the Galaxy A6s moniker, and it appears to have been relatively successful. As a reminder, ODM phones are manufactured by companies other than Samsung in their own factories, but they follow Samsung’s designs and carry the company’s branding. They are basically phones outsourced to local companies, resulting in lower production costs and more affordable market prices.
This has been one of the strategies that Samsung has implemented to improve its dismal market share in China, one of the most lucrative mobile markets on the planet. The company faces intense competition from local rivals across all segments of the market and has quite a ways to go before it can claw back a significant share. This strategy will certainly play a role in that.
Assuming that these recent reports turn out to be correct then Samsung’s strategy may have worked, and by the end of the year, the South Korean company might be able to substantially increase its market influence in the Far Eastern country. Samsung reportedly went the ODM route last year to lower manufacturing costs and attempt to make a larger-than-1% dent into the Chinese smartphone market.