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Samsung, the South Korean electronics behemoth, is allegedly intending to reduce smartphone output by 30 million units in 2022. The reduction will most likely affect its mid-tier and flagship devices.
Samsung to cut down production by 30 million units by this year
According to media sources, the three primary reasons for the drop are a global decline in smartphone demand caused by the COVID-19 epidemic, an ongoing scarcity of electronic components, and the Russia-Ukraine war.
Samsung was originally planning to create 310 million smartphones in 2022, but that aim has subsequently been reduced to 280 million devices. Furthermore, since global headwinds have hurt its components business, Samsung is said to have altered orders to its electronic component manufacturing businesses. According to reports, the corporation lowered its output for its component manufacturing companies by up to a month.
Previously, other electronics and smartphone businesses used similar measures to weather the storm. According to Business Standard, companies such as Apple have allegedly curtailed production of the iPhone SE by 20% and will not increase the number of iPhones made this year.
Samsung is also considering exiting India’s high-volume feature phone market. According to ET Telecom, the business would now focus on launching handsets priced beyond Rs 15,000. The decision is in accordance with the government’s Production-Linked Incentive (PLI) plan, whereby requires a business to produce phones with just a minimum factory value of Rs 15,000 to be eligible for the incentives.
What else we know so far:
According to reports, Samsung intends to abandon the high-value and low-value feature phone markets in India. The business intends to progressively depart the feature phone market, with the last batch of handsets built by local contract maker Dixon in December of this year.
According to ET Telecom, Samsung intends to focus on smartphones in upper market tiers. After the last batch of feature phones is made, the business will introduce predominantly phones priced over Rs 15,000. The business has already communicated with its channel partners, and they are planning to depart the Indian feature phone market within the next few months, before the end of this year.
According to the article, which cited experts, the decision comes as the Korean electronics behemoth is needed to produce phones worth Rs 15,000 factory price in order to be eligible for the government’s Production Linked Incentives (PLI) plan.
The decision is also consistent with a recent Counterpoint Research analysis, which claims that India’s feature phone market has declined 39 percent year on year due to supply chain difficulties, inflation, and weaker customer demand.
“The feature phone market shrank by 39% year on year.” The main causes for this fall were supply concerns, large inventory levels, and a weakening of consumer demand owing to rising inflation. With a 21 percent market share in Q1 2022, itel leads the feature phone market. “Itel has been the leading feature phone brand for nine straight quarters,” according to the research.
According to the same research, Samsung’s overall market share in India fell by one percent in the first quarter of 2022. However, for the second quarter in a row, it was the best-selling 5G smartphone business in India.
According to the study, Samsung has been working to enhance its position in the higher-priced smartphone market. “The company also maintained a lead in the affordable premium segment among both Rs 30,000 and Rs 45,000,” Counterpoint Research said in a report, adding that “the launch of its latest S22 series and revamping of the A-series and M series across price tiers towards the quarter’s end drove Samsung’s shipments.” Given the conditions, it makes sense for Samsung to concentrate on higher-end smartphones.
