Samsung‘s reliance on outsourced production for its budget phone segment seems to be growing. According to The Elec, the South Korean tech giant is projected to produce 67 million smartphones in 2024 through Chinese ODMs (original design manufacturers) and JDMs (joint device manufacturers).
That’s a significant jump from 44 million units in 2023 and makes up a substantial 25% of Samsung’s overall smartphone production target of 270 million units this year.
The report further indicates that Vietnam will play a role in Samsung’s outsourcing strategy, with an estimated 28 million units expected to be produced in Vietnamese factories.
Samsung is believed to be outsourcing so heavily to reduce costs that will allow it to offer more competitive pricing for its budget phone lines.
Samsung’s foray into outsourced production for affordable phones began in 2019. The approach does give the brand an advantage with low production and R&D costs, but it raises concerns about quality compromises outsourcing a product might bring.
ODM partners to increase their profit margins might cut corners on materials or components that may impact the overall user experience. A case in point is the Samsung Galaxy A03s believed to be an outsourced phone.
While it received some praise for its battery life and usability improvements, it also faced criticism for its cheap build quality and sluggish performance.
Despite these potential drawbacks, Samsung’s strategy seems to be resonating with consumers. The company held the distinction of being the only Android manufacturer with phones listed among the top 10 best-sellers in both 2022 and 2023.
So 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 balancing act between affordability and quality control in its outsourced phones.
The company will need to ensure its ODM partners maintain sufficient standards while delivering competitive pricing for budget-conscious consumers.
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