Samsung Electro-Mechanics is going to shut down its HDI (high-density interconnected) printed circuit board manufacturing unit in Jiangsu, China, due to low profitability, reveals a report by The Korea Herald.

Its HDI unit in China will stop producing and selling products, and the company will begin selling its assets instead. Unsurprisingly, the main reason behind Samsung Electro-Mechanics’ low profitability in China lies with strong competition from local suppliers who can afford to undercut Samsung.

Samsung keeps losing ground to Chinese rivals

HDI printed circuit boards are used by various products, ranging from laptops to smartphones. The company’s HDI unit in Jiangsu has been bleeding cash, and news of its shutdown comes just a couple of months after Samsung decided to pull the plug on its smartphone manufacturing operations in China. This only shows just how competitive local companies can be, and further accentuates Samsung’s lack of influence in the Chinese mobile space.

However, sources suggest that Samsung Electro-Mechanics has been looking to shelve its HDI business as a whole, not only in China but in other markets as well. This doesn’t seem to be entirely the case, or at least not for the time being. As opposed to closing its HDI operations in Busan, South Korea, Samsung Electro-Mechanics has been moving its production line to Vietnam.

HDI technology is not as good as SLP

While it may seem like Samsung Electro-Mechanics is taking a big hit by shutting down its HDI operations in Jiangsu, China (and it very well might), there still is the matter of SLP technology to consider. SLP is a more advanced printed circuit board manufacturing method and it was first employed by the Galaxy S9. SLP packages are more compact and allow for larger batteries and/or better internal components for smartphones.

With that in mind, Samsung Electro-Mechanics’ decision to shut down its HDI operations in China doesn’t look as doomy and gloomy. The overall demand for HDI PCBs may have slowed down because of the advancements brought forth by SLP, and Samsung Electro-Mechanics is one of the companies that are able to manufacture SLP boards. In other words – and while this wasn’t officially confirmed – the company might feel like it needs to focus less on HDI and more on other, more modern solutions. Should this be the case, Samsung Electro-Mechanics might be cooking a longer-term plan to bolster its revenues by focusing less on HDI and more on SLP manufacturing.