Samsung's reliance on outsourced production for its budget phone line appears to be on the rise. As reported by The Elec, the South Korean tech leader is expected to produce 67 million smartphones in 2024 through Chinese ODMs (original design manufacturers) and JDMs (joint device manufacturers).
This marks a notable increase from 44 million units in 2023, accounting for 25% of Samsung’s overall smartphone production goal of 270 million units this year.
Vietnam's Role in Production
The report also highlights Vietnam's involvement in Samsung’s outsourcing strategy, with approximately 28 million units anticipated to be manufactured in Vietnamese facilities.
Samsung's heavy reliance on outsourcing aims to cut costs, enabling the company to offer more competitively priced budget phones.
Samsung began outsourcing production for its affordable phone range in 2019. Although this strategy reduces production and R&D costs, it raises concerns about potential quality compromises that outsourcing might entail.
Potential Quality Issues
ODM partners may cut corners on materials or components to increase their profit margins, potentially affecting the overall user experience. For instance, the Samsung Galaxy A03s, believed to be an outsourced phone, was praised for its battery life and usability improvements but criticized for its cheap build quality and sluggish performance.
Despite these possible downsides, Samsung's strategy appears to resonate with consumers. The company was the only Android manufacturer to have phones listed among the top 10 best-sellers in both 2022 and 2023.
Balancing Act
Thus, the cost-effective approach achieved through outsourcing is delivering budget-friendly Android devices that find a market. Moving forward, it will be interesting to see how Samsung manages the balance between affordability and quality control in its outsourced phones.
The company will need to ensure that its ODM partners uphold sufficient standards while providing competitive pricing for budget-conscious consumers.
