Over the years, Samsung has used a process known as Joint Design Manufacturing to partner with firms in China for the manufacturing of smartphones.
This strategy allows the tech giant to cut its production cost by sharing some of the pre-production work with its partners.
Usually, Samsung keeps this trick for its budget class smartphones and not for the high-end flagship models, but it looks like the company wants to make this cooperation with the Chinese firms even closer.
In a report by Korean tech media The Elec, Samsung is planning to increase smartphone production through Chinese JDM partners from 44 million units in the previous year to 67 million units in 2024.
This would mean that outsourced smartphones will account for a quarter of Samsung’s targeted production of 270 million units this year.
At Samsung, in the aspect of Joint Design Manufacturing, it is a process whereby the design process is handled collectively with the Chinese partners.
These partners are then given a percentage from the sales made.
After the design of a JDM smartphone is done, Samsung, being the OEM, proceeds with mass production.
Rumours of Samsung ramping up production of smartphones through JDM in China this year have gained steam amid Chinese Premier Li Qiang’s open arms to Samsung Chairman Jay Y. Lee for more investment from the Korean giant in China.
Before a landmark summit involving Li, South Korean President Yoon Suk Yeol, and Japanese Prime Minister Fumio Kishida — the first trilateral talks between the Asian nations in over four years — a meeting took place in Seoul between China’s second highest-ranking official and the Korean executive.
It is believed that Samsung has invested $24 billion in the Chinese market during the last six years.
However, the Korean IT behemoth has faced rising challenges amid escalating US-China relations, particularly as it deals with export curbs imposed by Washington to limit China’s access to advanced processors.
Li’s decision to meet with the Samsung CEO is consistent with the thoughts stated by the Chinese leader during an earlier bilateral meeting with Yoon.
During the meeting, he urged Korean firms to enhance their investment and business engagement in China, as well as cooperation between Seoul and Beijing to ensure the stability of industrial supply chains.
Joint Design Manufacturing (JDM) is a process where Samsung collaborates with Chinese partners in the design and pre-production phases of smartphones, sharing sales revenue and mass production responsibilities.
Samsung plans to increase its JDM smartphone production to 67 million units in 2024, up from 44 million units the previous year.
JDM smartphones will account for 25% of Samsung’s targeted production of 270 million units in 2024.
Samsung is increasing its JDM production in China to reduce costs, enhance investment in the Chinese market, and navigate the challenges posed by escalating US-China relations.
The meeting aimed to encourage increased investment from Samsung in China and strengthen cooperation between South Korea and China to ensure stable industrial supply chains.
Also Read: Samsung Electronics Eyes Mass Production; Chip Manufacturing
Also Read: Samsung To Likely Start Mass Production of LPDDR5T Chips by 2024
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