With its massive new manufacturing facility in Noida, India, Samsung Electronics seeks to surpass their competitors as the world’s largest mobile phone provider.
Samsung Electronics, the South Korean technology company, has opened the world’s largest mobile phone manufacturing plant as part of its plan to expand production in the world’s fastest-growing major mobile phone market. Samsung Electronics has decided to build its new factory on the outskirts of New Delhi in Noida.
This new manufacturing plant will allow Samsung Electronics to make phones at a much lower cost thanks to the scale of the new project. With the construction of this massive new manufacturing plant, Samsung Electronics seeks to compete more effectively with competitors like China’s Xiaomi, which has become India’s largest smartphone brand.
In a speech at the inauguration of the plant, India’s Prime Minister, Narendra Modi stated, “This 50 billion-rupee investment will not only strengthen Samsung’s business ties in India, but it will also play a key role in India-Korea relations.”
This opportunity will prove to be a very beneficial one to Samsung Electronics’ stock as India is the world’s second largest smartphone market and home to more than a billion wireless subscribers. The opportunity comes at a time when Samsung mobile is not earning as much as they should be, fueling concerns that the mobile part of the business is running out of substantial growth ideas.
In a 2017 statement, Samsung Electronics said they would be spending over $716 million of the next three years to expand capacity at its Noida plant. The new 35-acre factory will allow Samsung Electronics to double its current capacity for mobile phones in Noida to 120 million units annually, twice the amount the company produced in 2017.
Samsung Electronics isn’t the only company doubling down on local manufacturing in India though. Thanks to India being a major growth market for smartphones and implementing local production to combat rising smartphone prices, China’s Xiaomi is also doubling down on manufacturing in India. With Xiaomi surpassing Samsung Electronics in Q4 2017, Samsung mobile is likely betting that this additional local manufacturing facility will allow them to reclaim their market dominance and reinvigorate consumer adoption of Samsung mobile devices.
In a statement about the new manufacturing facility, HC Hong, CEO of Samsung India said, “Samsung is a long-term partner of India. We ‘Make in India’, ‘Make for India’ and now, we will ‘Make for the World. We are aligned with Government policies and will continue to seek their support to achieve our dream of making India a global export hub for mobile phones.”
Samsung Electronics new investment seems like it can’t be operational fast enough with the company being one of the worst performing major tech stocks this year with $39 billion being wiped off its shares. As huge U.S. tech stocks like Apple and Amazon continue to outperform their Asian peers like Samsung mobile, Samsung Electronics’ stock will see more low-performance days ahead.