Samsung Seeking to Narrow Gap With Nokia
By Kim Yoo-chul
Staff Reporter
Samsung Electronics is accelerating its efforts to narrow the gap with the handset industry leader Nokia by expanding production facilities in its Chinese and Vietnamese plants.
``With the goal of producing 25 million more handsets in 2008, we will begin operating in Huizhou, China, centering on GSM and CDMA phones as construction for the line was completed late last month,’’ a Samsung spokesperson said Wednesday.
``We will also expand production facilities for handsets in another plant in Shenzhen to chase Nokia with low-end phones,’’ the official said, adding that the production capacity of its Tianjin plant is expected to reach 70 million units in a few years.
Samsung has three plants in China _ Huizhou, Shenzen and Tianjin. The Huizhou plant was modified for mobile phone productions from MP3 players, as the world’s second largest handset maker considers China as the company’s main production post for global handsets business.
``Within the next two to three years, Samsung will produce over 90 million mobile phones in China to confront Nokia with strong price competitiveness,’’ the official said.
Samsung officials say the company is now in the final stage of completing a new handsets plant in Vietnam, which will reportedly produce 100 million units annually.
Market analysts say Samsung’s two-tier strategy _ premium phone for high-end users in Europe and North America and low-priced phones in emerging markets such as China _ seems to have worked well, considering rebounded average selling prices (ASP) per unit in the third quarter, $151 from $148 the previous quarter. ASP is a key indicator for the industry, measuring profitability.
However, analysts say at least three or four more years might be needed to compete with the Finland-based giant.
According to Strategy Analyst, a market research firm, Nokia sold 112 million phones in the third quarter, taking up 39 percent of 285 million handsets, which were sold around the world in the quarter.
Unlike Motorola and Sony Ericsson, both of which failed to reverse their downward trend, Samsung sold 43 million sets, the biggest quarterly result in more than three years. Samsung’s WCDMA phones accounted for 14 percent of the total with 5.5 million phones.
``Samsung will increase the total global output to 150 million units in 2008 while trying to strengthen the two-tier strategy steadily to narrow the gap with Nokia,’’ said Yum Chel-jin, a senior manager in charge of telecommunication division.