Samsung China May Shut Down One Of Its Smartphone Factories

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South Korean smartphone maker Samsung is reportedly considering to shutdown one of its two smartphone manufacturing units in China. The concerned factory is located in Tianjin, northern China, where, the company plans to suspend its operations within a year before completely shutting the unit down. Sluggish smartphone sales in the local market and rising labor costs are two of the few reasons cited by the industry sources with knowledge of the matter to reason this step taken by Samsung. The sources further add that the company has already informed its suppliers about its plans for Tianjin Samsung Telecommunications (TSTC) plant. A Samsung executive, on the condition of anonymity, informed that smartphone production at Tianjin plant has already been reduced and the company plans to continue doing so in the near future, though, the decision to halt the production couldn’t be confirmed.

The firm has lost a major chunk of its smartphone business to Chinese players including Huawei, that recently became the world’s number two smartphone seller overtaking Apple, besides holding the top position in China. The report adds that sales from the Tianjin plant were 11.41 trillion won ($10 billion) in 2014, which reduced to 6.93 trillion won ($6.1 billion) the next year, with this downward slope continuing in 2016 as well. Once a global smartphone production hub, the manufacturing facility was established in 2001 and it continued to grow until 2013 when it touched the sales figure of 15 trillion won ($13.2 billion). After the production at this plant is halted, Samsung’s smartphone production base in the Asian country will be confined to only one factory that is based in Huizhou, southeastern China. Lately, the South Korean firm has been shifting its manufacturing base to other Asian countries including Vietnam and India, which is another reason provided for the closure of the Chinese plant besides lackluster sales.

Just last month, Samsung inaugurated the world’s largest smartphone manufacturing facility in Noida, northern India. The company had expanded its existing plant that was established in 1996 to almost double its smartphone production from the plant to 120 million units annually. With this unit in place, Samsung plans to meet 50 percent of its global smartphone demand from the Indian facility, while the numbers currently stand at 10 percent. While sales in the Chinese market haven’t met Samsung’s expectations, the situation is opposite for the south Asian market where the company holds a majority market share.