Samsung Banks Recovery on Emerging Markets, Opens New Indonesia Smartphone Plant

Samsung reportedly has opened a manufacturing plant near Jakarta, Indonesia, signalling that it plans to go head-to-head with upstart Xiaomi and other handset upstarts for leadership in newly emerging markets in 2015.

The Korean device maker, which currently assembles handsets in China and Vietnam in addition to its native South Korea, intends to assemble up to 1.5 million smartphones a month at the facility, according to a Wall Street Journal report. The vendor’s plans call for it to manufacture its 4G-enabled smartphones at the facility and begin selling them this month, the report said.

The move likely owes to Samsung’s decision to more aggressively pursue sales of low-cost smartphones in emerging markets beyond China and India and to cut costs by manufacturing devices closer to their intended market. The vendor also has a facility near Delhi, India and might add another.

The Journal reported that Samsung’s strategy to make phones in Indonesia results at least partly from new Indonesian regulations to confine production of mobile phones for the local market to the geographic area. Samsung reportedly began making phones in Indonesia for the local market at the beginning of this year, the report said.

According to researcher IDC, Samsung leads the Indonesian market with a 30 percent share as of Q1 2015. Some 24.8 million smartphones in Indonesia were shipped in 2014 with expectations 30 million units will ship this year, IDC said.

Samsung will face stiff competition in Indonesia as China-based Oppo and Haier both are finishing construction of their smartphone factories, with production expected to begin in Q2 2015, according to an Indonesia-Investments report.

Oppo expects its manufacturing plant will make between five and 10 million handsets a year, while Haier’s plant has an annual capacity of some 2.5 million smartphones, the report said.

Samsung’s shift to smartphone production in emerging markets comes as the China mobile handset market contracted for the first time in six years, according to new IDC data. Smartphone shipments in China fell 4 percent year-over-year to 98.8 million units in Q1 2015 and shrunk 8 percent sequentially from the prior quarter, IDC said. The researcher attributed a large inventory buildup at the end of 2014 for the slowdown.