Samsung Electronics has ended the production of smartphones in its last factory facility Huizhou in China. It saying the decision was part of its ongoing efforts to enhance efficiency in its production facilities.
It’s market share has shrunk to 1% as Chinese consumers turn to local brands for affordable devices and to Huawei and Apple for premium models, according to Park Sung-soon, an analyst at Cape Investment & Securities.
It was last year when it closed another factory in Tianjin leaving them with the factory which they have closed. Samsung said in an emailed statement Friday that it “has arrived at the difficult decision to cease operations of Samsung Electronics Huizhou” in China in late September.
In 2017 the Huizhou factory made 64 million phones, a significant fraction of Samsung’s global output of 394 million. In 2011, this factory made 70 million phones while the one in Tianjin produced 56 million (the Tianjin facility was closed late last year).
Samsung is pulling out of China because it’s no longer economically viable to make its phones there, but it will continue selling its phones there. The stiff competition from local brands is the reason why it has made a withdrawal of its operation in China.
The production equipment from the factory is being moved to other Samsung facilities around the world. The company has been expanding its production capacity in countries like India and Vietnam due to the lower cost of manufacturing there.
South Korean media say Samsung’s end of mobile phone production in the world’s largest smartphone market was partly because of rising labor costs in China. It’s not just Samsung either, Sony closed down its Beijing smartphone plant earlier this year.
The company says it’s following appropriate processes under China’s relevant laws to withdraw.