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Samsung would have reduced its production of smartphones, sales are at half mast

According to 01Net’s Samsung would have reduced its production of smartphones, sales are at half mast
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Samsung would have been forced to reduce its production of smartphones. Faced with declining sales worldwide, the South Korean group is said to have slowed down the pace of its factory in Vietnam.

Samsung would have made the decision to reduce its production of smartphones. According to information from our colleagues at Reuters, the South Korean giant has reduced the quantity of telephones produced in its Thai Nguyen Factory, In Vietnam. The factory typically manufactures 100 million devices a year, more than a third of Samsung’s annual output. The brand shipped 270 million phones worldwide last year.

According to the testimonies of several employees of the factory, their working hours have been considerably reduced. However, terminal production is usually in full swing during the summer.

“We will only work three days a week, some lines are changing from a 6-day work week to 4 days, and of course no overtime is needed” says Pham Thi Thuong, a Thai Nguyen worker.

Citing the words of a dozen workers, Reuters says that the factory is currently idling. The workers interviewed say they have never experienced such a drop in production in the space of five years of work.

On the same subject: Why Samsung could invest 200 billion dollars in semiconductor factories in the United States?

The smartphone market is collapsing

Unsurprisingly, Samsung is adapting its production targets to smartphone demand. Like all manufacturers, the Seoul giant is suffering from the collapse of the mobile phone market. As inflation surges around the world and geopolitical tensions mount, phone sales are expected to decline 3.5% in 2022, the International Data Corporation (IDC) predicts.

Roaring inflation and economic uncertainty have chilled consumers everywhere, summarizes Nabila Popal, research director of IDC.

The second quarter figures corroborate IDC’s projections. Over the period, sales contracted by 8.7% compared to last year. This is the fourth consecutive quarter where the market is down. The particularly marked decline in Europe, in particular because of the war in Ukraine initiated by Russia. Based on the latest figures, Gartner, another analyst firm, is counting on a drop of around 6% over a year.

Folding smartphones to the rescue

In this context, Samsung would not be able to meet sales targets. The manufacturer reportedly ended up with a total of 50 million unsold Galaxy A phones recently. Faced with Chinese competition, which continues to cut prices, Samsung’s mid-range smartphones would no longer be popular.

However, Samsung has recorded strong performance in the first quarter of the year. Driven by the release of the Galaxy S22, the South Korean giant sold 73.6 million devices over the period. Samsung had managed to retain its leading position with more than 23% market share. The group’s shares only fell by 1.5%, compared to more than 15% for certain brands, such as Xiaomi or Oppo.

Despite this good start to the year, the company seems to be expecting a drastic drop in demand during the second semester. In May, the group also reduced its production of terminals in anticipation of consumer disinterest.

To stem this expected drop in sales, Samsung would rely on its new folding smartphones. As of August 10, the brand will announce the Galaxy Z Fold 4a phone convertible into a small tablet, and the Galaxy Z Flip 4, a clamshell smartphone reminiscent of the flip phones of the 90s. This year, Samsung hopes to double its sales of folding smartphones. The brand expects the more expensive Z Fold 4 to be popular with its customers.

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