Samsung to boost phone production in China through JDM partnerships

Samsung to boost phone production in China through JDM partnerships
For years, Samsung has been teaming up with companies in China to make smartphones through a method called Joint Design Manufacturing (JDM). This approach helps the tech giant save on production costs by divvying up some of the pre-production work among its partners.

Samsung usually reserves this production tactic for its budget-friendly phones rather than its flagship models, and now it seems it is planning to expand its collaboration with Chinese companies even more.

25% of Samsung's phone production this year is expected to come from outsourced sources

According to reports from Korean tech media The Elec, Samsung plans to ramp up smartphone production through Chinese JDM partners from 44 million units in the previous year to 67 million units in 2024. This increase would mean that outsourced smartphones will make up a quarter of Samsung's targeted production of 270 million units this year.

In Joint Design Manufacturing, Samsung collaborates with its Chinese partners to handle the design process collectively. These partners then receive a share of the profits from sales. Once the design of a JDM smartphone is finalized, Samsung, as the original equipment manufacturer (OEM), proceeds with mass production.

Given Samsung's relatively small market share in China, opting for Joint Design Manufacturing (JDM) could be a prudent move. By partnering with local firms, Samsung shares the costs of producing and selling Galaxy phones in China, reducing its financial exposure. Additionally, leveraging the expertise of local manufacturers enables Samsung to align with regional design preferences if needed.

The buzz about Samsung upping its smartphone production via JDM in China this year coincides with Chinese Premier Li Qiang's open arms to Samsung Chairman Jay Y. Lee, encouraging more investment from the Korean giant in China.

Before a landmark summit involving Chinese Premier Li, South Korean President Yoon Suk Yeol, and Japanese Prime Minister Fumio Kishida – the first trilateral talks between the Asian nations in over four years – a meeting occurred in Seoul between China's second highest-ranking official and the Korean executive.

It's reported that Samsung has poured $24 billion into the Chinese market in the last six years. However, the Korean tech giant has encountered mounting hurdles amidst escalating US-China tensions, particularly as it grapples with export restrictions imposed by Washington to restrict China's access to advanced chips.

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Li's decision to meet with the Samsung executive reflects the sentiments expressed by the Chinese leader in a previous bilateral meeting with Yoon. During that encounter, he urged increased investment and business collaboration from Korean enterprises in China and called for cooperation between Seoul and Beijing to uphold the stability of industrial supply chains.

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