Samsung’s new outsourcing strategy could lead to cheaper smartphones

Samsung will reportedly outsource a fifth of its smartphone production operations to Chinese contractors in 2020. The alleged planned move would lower costs and help the South Korean company compete with Chinese rivals that keep undercutting it, such as Huawei and Xiaomi. 

Anonymous sources who are “familiar with the move” told Reuters that Samsung plans to ship an estimated 60 million phones made in China by “original design manufacturers” (ODMs) in 2020, out of out of an overall total of around 300 million.

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The source, rather damningly, described the plans as “an inevitable strategy rather than a good strategy”. 

At the time of publication, the suspected partner company is Wingtech, which Samsung has already worked with − on the mid-range Samsung Galaxy A6S.

The Galaxy A6S’ status as an ODM-made phone essentially means it’s surprisingly affordable, despite having decent specs. The A6S has 6GB of RAM, dual rear cameras and a Snapdragon 660 SoC, and at launch the 64GB model was available for just ¥1799 (~£200), with the 128GB version priced at ¥2199 (~£245).

Outsourcing phone manufacturing in this way isn’t uncommon in the industry, and can help bring prices down for consumers. Alongside other ODMs, Wingtech already makes phones for Oppo, Huawei and Xiaomi.

However, because Samsung will have less influence over quality control, could this result in worse products being created?

Samsung can ill-afford a quality crisis in such a competitive industry. It’s already pushed its luck with the disastrous Galaxy Note 7 and Samsung Galaxy Fold.

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If all goes well, the only noticeable change for the consumer may just be one or two more affordable Samsung handsets. What’s not to like? There is, of course, a chance that one or two of them have small bugs or issues as Samsung transfer more phone manufacturing to ODMs, but we’ll have to wait for consumer feedback as the shift takes place.