Samsung Electronics plans to set up a factory in Indonesia to make as many as 900,000 mobile phones per month, reportedly mostly for the growing domestic market.
The announcement yesterday comes after the government said in April it was considering taxing smartphone imports to protect domestic vendors from foreign competition. The proposal is likely to be voted on after the new administration, led by president Joko Widodo, who is seen as business friendly, takes office in October.
Indonesia is one of the largest consumer markets in the world, with a population of 240 million. Smartphone penetration is estimated at just 20 per cent. IDC Indonesia has forecast shipments of mobile devices to reach 60 million this year, with 15 million smartphones and four million tablets expected to be sold this year.
Samsung, which currently has handset factories in China and Vietnam, produces about 5.7 million smartphones per week globally. According to a report from Reuters, a factory in West Java will start producing 100,000 units a month by the end of the year and gradually build up the capacity to 900,000 units a month. It is not clear what type of devices will be produced from the local plant.
To start production this year, Samsung presumably has a pre-determined factory set up in Indonesia. So, according to an executive familiar with component manufacturing, it’s essentially a question of replicating an assembly flow using machines it can order from existing third-party suppliers.
Since planning for the factory likely started some time ago, our source said that if the machinery has been pre-ordered, he sees no issue in getting such a line up and running in a few months. “Remember that many of the building blocks will come from other, already up and running, factories,” the source told Mobile World Live.
Our source also noted that Samsung probably already manufactures other products in the country, so may have suitable staff trained.
Foxconn, a key supplier for Apple and other leading consumer product brands, said in late January it would invest $1 billion to set up low-cost factories in Indonesia, but has since stated it is waiting for the new government to be in place before making a final decision.