Era of made-in Korea smartphones is ending.
The heyday for Korea’s once-bustling smartphone plants appears to have come to an end with both LG Electronics and Samsung Electronics either shutting down production lines or curtailing domestic output, according to industry analysts Wednesday.
Smartphone makers are moving their local production lines to Vietnam and other countries where labor costs are lower, amid continuous stagnation of the global market. This is in addition to increasing competition from Chinese smartphone makers such as Huawei and Xiaomi that have price competitiveness.
The move is leading to forecasts that smartphone production in Korea could soon plunge to zero.
“Amid stagnation of the global smartphone market and cut-throat competition, Korean smartphone makers have no choice but to cut costs and operate personnel more flexibly,” said an industry analyst who declined to be named.
According to market researcher Strategy Analytics, smartphones produced in Korea accounted for 11.4 percent of the total shipped in the global market in 2008, but the figure fell sharply to 1.3 percent in 2018.
The figure is expected to fall further following LG Electronics’ decision to phase out work at its Pyeongtaek factory in Gyeonggi Province by the end of the year and shift production to Hai Phong in Vietnam where the firm has operated a factory since 2014.
LG’s Pyeongtaek factory had the production capacity of 5 million devices.
An official from LG Electronics said once the production line from Pyeongtaek is added, the Hai Phong factory with annual production capacity of 6 million devices will have production systems for the full lineup of LG smartphones with an annual capacity of 11 million.
“The decision to move the smartphone production line to Vietnam has been made to promote improvement in profitability and raise our global competiveness amid stagnation in the global smartphone market,” the official said.
Samsung Electronics is also scaling down its output in Korea.
The firm produced about 60 million smartphones annually in Korea a decade ago, but is currently producing about 20 million, according to industry sources.
The firm’s smartphone production in Korea is apparently given little weight, considering the firm, which operates factories in Vietnam, Brazil, India and Indonesia produces about 300 million devices a year in total.
The tech giant produces almost half of its entire smartphones in Vietnam.
Samsung also plans to build additional factories in India, seeking to increase smartphone production there.
Those moves are apparently aimed at cutting costs amid comparatively high labor costs in Korea and an increase in the prices of components.
The monthly minimum wage in Vietnam ranges from $126 to $180 for 2019, according to Vietnam’s National Wage Council.