Challenges remain for Samsung handsets in India amid export expansion, says DIGITIMES Research

Samsung Electronics has significantly increased its handset exports from India in recent years. According to DIGITIMES Research, whether Samsung will keep expanding exports from India may be determined by the development of India's handset manufacturing ecosystem, its relationship with Islamic countries, and Vietnam's view of the rise of India in handset production.

DIGITIMES Research analyst Yen Chou observed that India's handset exports experienced two periods of expansion since 2009, the first from 2010 to 2013, with Nokia spearheading, and the second wave started in 2018, with India seeing handset exports to the US growing by 100 times and exports to Russia increasing by seven times during 2018 and 2022.

Initially, Samsung established its handset production capacity in India to meet local demands until supply chain diversification became an important issue for manufacturers following the US-China trade war and the pandemic. Therefore, Samsung scaled up its handset exports from its Noida facility in India and became the top handset exporter in India before it was surpassed by Apple in 2023, which urged its suppliers to expand investments in India over the past years.

Based on data from SIEL and various sources like unboxing videos on the internet, DIGITIMES Research observed that amid the heightened US-China geopolitical risks, Samsung switched its policy by increasing made-in-India smartphone exports and expanding the markets beyond the Middle East, Europe, and Africa, to the Americas. Still, the Middle East and Europe accounted for a significant portion of Samsung's handset exports from India, particularly the United Arab Emirates.

In 2021, The Elec quoted an internal Samsung document revealing its plans to shift 19 million units of its handset production from Vietnam, which has a production capacity of 182 million units, to Indonesia and India as a part of the strategy to diversify its global production by 2026. DIGITIMES Research observed that Samsung is on track to achieving its 2026 plan, intending to elevate handset production capacity in India from 60 million units in 2020 to 108 million units by 2026.

However, Samsung faces three challenges in expanding its smartphone exports from India. First, unlike Vietnam, where Samsung can manufacture smartphones and their components, Samsung's Noida facility in northern India still depends on imports for certain parts, such as charging cables and protective plastics used in packaging smartphones. For instance, UIL Electronics, a South Korean company, established its manufacturing plant in India, but its production capacity might not suffice to fulfill the demand in India, causing Samsung to rely on component imports from Vietnam.

Another aspect to consider is the connection between India and Islamic countries, which could pose hurdles for India's exports to these regions. DIGITIMES Research noted that Pakistan, with a population of 230 million, did not import any Samsung smartphones manufactured in India.

The third risk that could impact Samsung's smartphone exports from India involves the relationship between Samsung and the Vietnamese government, as Vietnam's economy heavily relies on investments by Samsung. In late 2022, a South Korean ET News, citing sources, reported that Samsung planned to reduce its handset production share in Vietnam from 50% to 40% while ramping up production in India, Indonesia, and Brazil, causing concerns within the Vietnamese government. Senior executives at Samsung had to make multiple public statements highlighting Vietnam's role in Samsung's supply chain, with smartphones manufactured in Vietnam by Samsung being exported to approximately 128 countries globally, a significantly higher number compared to exports from India.

Source: DIGITIMES Research, December 2023