Published: Fri, December 14, 2018
Electronics | By Kelly Massey

Samsung announces the closure of one of its two factories in China

Samsung announces the closure of one of its two factories in China

Samsung is to close its largest factory in China due to slowing smartphones sales and rising manufacturing costs.

The South China Morning Post says Samsung confirmed the closure of the plant in Tianjin at the end of the year after workers posted the news on social media. The world's biggest smartphone maker has seen its share in the Chinese smartphone market shrivel to 0.8 percent by June this year after losing ground to local Chinese brands such as Huawei, according to market research firm Strategy Analytics.

The factory was one of two mobile phone manufacturing plants the company operates in mainland China, alongside its facility in Huizhou, Guangdong.

The plant Samsung has chose to close down until the end of the year is now employing roughly 2,600 people who will be provided with severance packages and the choice of relocating to the other Chinese Samsung plant from Huizhou, Guangdong.

Samsung declined to disclose the capacity of each factory.

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"As part of ongoing efforts to enhance efficiency in our production facilities, Samsung Electronics has arrived at the hard decision to cease operations of Tianjin Samsung Electronics Telecommunication", Samsung said in a statement.

Why it's important: Since the early 2010s, Samsung's share in the China phone market has shrunk dramatically. According to the publication, the Chinese factory produced 26 million smartphones per year. Though the company has vowed to fight back on numerous occasions and undertook many measures, it has failed to make any perceptible gains so far in the world's largest smartphone market.

The slow revival of China was one of the reasons for low growth in Q3 2018 and slowdown will continue in Q1 2019.

Samsung said its third-quarter revenue rose 5.5 percent to 65.5 trillion won.

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