Samsung Electronics will end Chinese personal computer production as it looks to shift production to Vietnam to cut costs and remain competitive in the PC business, Nikkei Asian Review reported.
|The move is expected to help the South Korean tech giant to stay competitive.|
The plant in the city of Suzhou will close as soon as this month and convert part of the facility into a research and development center, while Samsung informed employees of the factory stoppage and job cuts at the end of July, Nikkei reported.
The South Korean tech group looks to shift production to an existing factory in Vietnam. A spokesman said the decision to shut the Chinese plant was based on the need to find a cost advantage.
Samsung Electronics Suzhou Computer, the unit that runs the Chinese plant, was established in 2002 as a PC assembly center. The computers made at the factory were sold mainly in South Korea, North America and China.
At its peak, Suzhou Computer employed 6,500 people, South Korean media say. The headcount has since shrunk to 1,700.
Global PC shipments inched up 0.6% last year to 261.23 million units, research firm Gartner said. China's Lenovo Group holds the top share at 24.1%, while US rival HP ranks second at 22.2%.
Japanese makers have left the business as top players dominate the market. Samsung will continue to make PCs, but the company will cut labor and other costs by relocating production.
Samsung once operated three smartphone factories in China, but the group shut down all Chinese production at the end of 2019. The capacity has been transferred to Samsung's Vietnamese facilities or delegated to contract manufacturers.
According to Samsung's statistics, around 50% of Samsung's smartphones and tablets are produced in Vietnam and exported to 128 countries and territories, including the US, Europe, Russia and Southeast Asia.
In the 2008 – 2018 period, Samsung increased its total investment in Vietnam from US$670 million to over US$17.3 billion, a 26-fold increase.
In early March, Samsung Vietnam started construction its largest R&D center in Southeast Asia in the west of Hanoi at a cost of US$220 million. The company expected Vietnam would not only be its largest production hub, but also a strategic base for R&D.