Samsung is going to reduce the cost of its smartphones with a new production strategy (Topic)

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Samsung is going to reduce the cost of its smartphones with a new production strategy


Samsung plans to conquer the low-cost smartphone market. To do this, the company came up with a way to reduce the consumer price of its mobile gadgets. As a result, cheap Samsung smartphones, according to the corporation's expectations, should help it in a tough competition with such Chinese giants as Huawei and Xiaomi.

Samsung's new strategy

To achieve its goal, the manufacturer is going to reduce the cost of its smartphones. To do this, the company plans to transfer part of its production to a Chinese contractor, which will also partially take over the development functions. This decision will allow Samsung to reduce production costs, which will ultimately lead to a decrease in the retail price at which a consumer can buy a cheap smartphone from the South Korean brand. In addition, the company expects to strengthen its position in the budget gadgets market.

Samsung devices will be produced by the Chinese manufacturer Wingtech, which already cooperates with such large brands as Xiaomi, Huawei, Oppo, LG. The Chinese contractor will develop, manufacture and assemble cheap Samsung smartphones of the Galaxy A family. The South Korean brand is going to outsource about 20% of its production.


Thus, the Chinese reseller will take over the production of models of the budget segment, and Samsung will continue to produce flagship smartphones independently at its own factories. By the way, this is not the first time the South Korean manufacturer has collaborated with Wingtech. Last year, the company, on behalf of Samsung, already produced the budget smartphone Galaxy A6s for Chinese consumers, which could be purchased locally for less than $ 200.

According to analysts, resellers like Wingtech can purchase all the components for the production of gadgets cheaper than large companies. In addition, Wingtech will pay a third less for a number of parts than Samsung, which buys the right components in Vietnam, where the company has three manufacturing plants.

What the experts think

At the same time, industry experts do not share the Korean brand's optimism. In their opinion, cheap Samsung smartphones, transferred to outsourcing, may be of lower quality. A number of researchers criticized Samsung's new strategy, explaining that the company may lose the ability to control the quality of the devices produced by the contractor. The corporation, in turn, intends to strictly monitor intermediary production.

Analysts believe that the Samsung brand should not risk its "quality" reputation. The reason for this is some events when the company's gadgets did not perform well. So, the company was forced to withdraw from production the flagship Galaxy Note 7 (2016) after several fires of the device occurred due to overheating of the battery. In addition, this year's graduate, the flexible Galaxy Fold, has also suffered criticism for quality issues with the innovative foldable display, which the manufacturer spent months fixing.

The Topic of Article: Samsung is going to reduce the cost of its smartphones with a new production strategy.
Author: Jake Pinkman