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Samsung has opened a new smartphone factory in India (KRW)

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Samsung has opened the world’s largest smartphone manufacturing facility in India, Bloomberg reported Monday. The 35-acre factory will allow Samsung to manufacture 120 million mobile devices a year — nearly twice the amount that the company produced in India in 2017.

Total Smartphone Shipments in India, by Vendor BI Intelligence

The factory will produce all Samsung smartphones, including entry-level devices, and the flagship Galaxy S9, S9+, and Galaxy Note8. Samsung’s move will also help the company remain competitive with its chief rival in India: Xiaomi. The Chinese smartphone maker added three new phone manufacturing facilities this past April, doubling its total in India to six.

Here’s why Samsung and Xiaomi are doubling down on local manufacturing in India:

  • India is a major growth market for smartphones. India is currently the second-largest smartphone market in terms of shipments after China, and shipment volumes in the region continue to grow. There were 124 million smartphones shipped in India in 2017, a 14% year-over-year (YOY) increase from 2016, per IDC. This represents the fastest growth among the 20 largest global smartphone markets.
  • Local production can combat the potential for rising smartphone prices. In January 2018, the Indian government raised its import taxes on consumer electronics to promote domestic manufacturing. The customs duty on phones rose from 10% to 15% for companies shipping devices to India. Manufacturing smartphones locally evades the import tax and can help prevent inflated smartphone prices for consumers in India.

Samsung’s likely betting that the additional local manufacturing facility will help the company reclaim its market dominance. Over the last few years, Samsung has claimed the title of the leading smartphone vendor in India in terms of device shipments, while Xiaomi has been slowly increasing its shipment market share since its entry in 2015.

By Q4 2017, Xiaomi surpassed Samsung as the leading smartphone brand by shipments in India and managed to retain the top spot in India’s smartphone market in Q1 2018. Samsung’s decision to expand production capacity in the country could help to reinvigorate consumer adoption of Samsung devices, helping the company take back market share from its Chinese competitor.

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