China’s consumer electronics supply chains seem to be losing their shine in the post-Covid-19 world. Samsung and arch-rival Apple have initiated the relocation of their smartphone production to other locations. The South Korean tech giant is now pursuing its only TV manufacturing facility from Tianjin.
According to reports in the South Korean media, Samsung could close its only manufacturing facility in Tianjin soon before the end of 2020. According to the Nikkei Asian Review, production could be relocated to Samsung’s plants in Vietnam, Mexico, Egypt, Hungary, and possibly newer destinations.
However, the electronics giant has made it clear that the current production of the Tianjin unit cannot be slowed down. Nikkei cited company officials to explain that the move was part of a stronger trend for companies to move their supply chains out of China.
What’s driving Samsung’s move?
Recently, Samsung, the world’s leading flat-panel TV provider, has lost market share in China due to increased local competition and local reactions to South Korea’s decision to deploy anti-missile shields despite Beijing’s objections. Growing anti-China sentiment further exacerbated Samsung’s decision to exit.
The company started manufacturing Tianjin televisions almost 27 years ago. In recent times the company has reduced its business activity significantly with just under 300 employees. Samsung would reassign these employees to other facilities or help them find alternative employment, the report said.
Whatever your entertainment fix, our 2020 # SQLED range is ready. Check the thread to see if the Q60, Q70, Q80, or Q90 best suits your needs. # SamsungQLED #SmartTV pic.twitter.com/5Jyg95EoBRAugust 27, 2020
The Indian option is open
Production from this factory could be relocated to other regions, with India already on the radar for the electronics giant. In June, the company announced that it would manufacture more than 85% of its televisions sold locally in India. Both Samsung and OnePlus had teamed up with the Chinese firm Skyworth to manufacture televisions at their Hyderabad facility, operated as part of a joint venture with an Indian partner.
A report in the Business hours Samsung also claimed to have deepened its collaboration with Indian contract manufacturer Dixon Technologies to expand its range of televisions in India to include 43- to 58-inch models. Until now, Dixon only made televisions in the 32 to 43 inch range.
Readers would recall that Samsung stopped television production in India in 2018 after the federal government imposed additional tariffs on open-cell TV panels, which resulted in Samsung importing finished televisions from Vietnam duty-free through the free trade agreement.
In 2019, these additional tariffs for open-cell panels were brought back to zero. Given that open cell panels account for nearly 70% of the cost of a television to manufacture, Samsung’s move to India is understandable in the current context where the need to leave China is complemented by India’s open door policy.
In India there have been major TV production campaigns. Some of Samsung’s top competitors, including LG, Sony, Panasonic, Xiaomi, and OnePlus, joined the Indian manufacturing program.