Samsung seems to be increasingly reliant on outsourced production for its budget smartphone range. The South Korean tech giant is anticipated to produce 67 million smartphones in 2024 through collaborations with Chinese original design manufacturers (ODMs) and joint device manufacturers (JDMs), as reported by The Elec.
This signals a significant uptick from the 44 million units manufactured in 2023 and constitutes a substantial 25% of Samsung’s ambitious target of 270 million smartphones for the year.
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Moreover, the report underscores Vietnam’s crucial contribution to Samsung’s outsourcing approach, with estimates suggesting that around 28 million units will be produced in Vietnamese facilities.
Samsung’s significant pivot towards outsourcing is geared towards cutting production costs, empowering the company to introduce more competitively priced models within its budget smartphone lineup.
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Since embarking on outsourced production for affordable phones in 2019, Samsung has gained a competitive advantage by trimming production and R&D costs. Nevertheless, this approach raises apprehensions about potential quality trade-offs linked with outsourcing.
In pursuit of bolstering their profit margins, ODM partners might compromise on the quality of materials or components, potentially impacting the overall user experience. The Samsung Galaxy A03s, believed to be a product of outsourcing, stands as a case in point.
While it has been commended for its extended battery life and improvements in usability, the phone has faced criticism due to its below-par build quality and sluggish performance.
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Despite possible drawbacks, Samsung’s strategy seems to resonate well with consumers. The company distinguished itself as the sole Android manufacturer with phones listed among the top 10 best-sellers for both 2022 and 2023.
Hence, the cost-saving measures facilitated by outsourcing are yielding affordable Android devices that are effectively gaining market traction.