Samsung To Benefit From New India Factory As They Go After Mid Tier Market
Samsung is set to go after the mid-tier market in Australia with a range of new smartphones built in a brand new factory in India.
According to Samsung executives at IFA the move will see Samsung gain an advantage over Chinese brands such as Oppo, Huawei and US brand Motorola by delivering cheap smartphones into a market that is significantly bigger than the premium smartphone market which Apple and Samsung currently dominate.
The worldwide mid-market worldwide including Australia is twice the size of the high-end market but offers lower profitability.
A big advantage for Samsung is the location of the factory in India where smartphones for the Australian market will be built.
Just over half of the global population has a smartphone, and that figure will rise to 77% by 2025, an addition of roughly two billion new smartphone users, according to GSMA Intelligence, a mobile industry researcher.
“This is the right place to have the manufacturing hub for the world,” said H.C. Hong, chief executive of Samsung Electronics in India, about the company’s new facility in India, which will be fully built in a New Delhi suburb by 2020. It will eventually make 120 million handsets in a year, or roughly one of every 13 phones in the world. Around 30% of those will be exported.
Chinese brands accounted for the majority of the global smartphone market for the first time last year and Samsung intends to change this statistic according to TrendForce, which tracks device sales.
That’s a jump from 32% in 2013. The Chinese phone makers have undercut the South Korean tech giant on price, while offering comparable or better features on their smartphones.
India is also on pace to surpass the U.S. next year as the world’s second-largest smartphone market after China.
Samsung is spending around $700 million on the smartphone factory near New Delhi.
The company’s de facto leader, Lee Jae-yong, flew into India this summer to cut the ribbon, flanked by Indian Prime Minister Narendra Modi and South Korean President Moon Jae-in.
Samsung’s Mr. Hong said its phones are fully India-made, unlike those of rivals which import some parts. For that reason, Mr. Modi has chosen to use a Galaxy handset. To boost production in India, Samsung will shift handset production away from China, industry analysts said.
India is just one example of the competition over cheaper smartphones. According to Canalys, twice as many inexpensive phones, which are priced at $200 and below, were shipped in the first half of this year as expensive ones, priced at $500 and above. In 2013, both markets were about even.
“The global smartphone market has peaked, but emerging markets are growing,” said Tarun Pathak, analyst at research firm Counterpoint. “The battle for the next billion consumers is more important than the premium market.”