Samsung and LG shut down their production lines, marking the end of the era of Korean-made smartphones

On May 6, according to the Korea Times, industry analysts said that as LG Electronics and Samsung Electronics either closed their Korean smartphone production lines or cut domestic production in South Korea, the once glorious era of Korean-made smartphones is coming to an end.

As the global smartphone market continues to stagnate, South Korean smartphone makers are moving their local production lines to Vietnam and other countries with lower labor costs. In addition, competition from price-competitive Chinese smartphone makers such as Huawei and Xiaomi is also intensifying. It is predicted that South Korea's smartphone production may soon fall to zero.

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"Against the backdrop of stagnation and fierce competition in the global smartphone market, South Korean smartphone makers have no choice but to cut costs and arrange personnel more flexibly," said an industry analyst who asked not to be named.

Data from market research firm Strategy Analytics shows that in 2008, smartphones produced in South Korea accounted for 11.4% of total global market shipments, but this proportion dropped sharply to 1.3% in 2018, and this figure is expected to fall further.

Previously, affected by the shrinking global smartphone market, LG Electronics decided to phase out its Pyeongtaek plant in Gyeonggi Province, South Korea by the end of this year and move production to Haiphong, Vietnam, where the company has been operating a plant since 2014. The LG Pyeongtaek plant has a production capacity of 5 million smartphones.

An LG Electronics executive said that once the production line of the Pyeongtaek plant is transferred to Haiphong, the Haiphong plant, which has an annual production capacity of 6 million smartphones, will have a production system for producing the full range of LG smartphones, with an annual output of 11 million units.

The executive added: "Our decision to relocate our smartphone production lines to Vietnam is to improve our profitability and global competitiveness at a time when the global smartphone market is stagnant."

In April, according to a report by Korean media "news1", LG Electronics will start producing mobile phones in Haiphong City, Vietnam, Sao Paulo, Brazil and other places from June, gradually transferring production equipment to countries with cheaper labor and reducing domestic Korean employees.

Other relevant sources speculated that LG Electronics will stop producing mobile phones in South Korea this year. An American technology media pointed out that stopping the production of mobile phones in South Korea does not mean the end of the company's mobile phone business, but it may be the beginning of the end stage.

Industry insiders stressed that moving production equipment overseas to reduce costs is only a stopgap measure, and the key is to launch mobile phones that can increase sales as soon as possible.

In addition to LG Electronics, Samsung Electronics is also reducing its production in South Korea. According to industry insiders, the company produced about 60 million smartphones a year in South Korea 10 years ago, but currently produces about 20 million a year.

Samsung Electronics' smartphone production in South Korea is clearly not taken seriously, considering that its factories in Vietnam, Brazil, India and Indonesia produce about 300 million smartphones a year in total. The tech giant produces almost half of its smartphones in Vietnam. In addition, the company plans to build more factories in India to increase smartphone production there.

The moves are apparently aimed at cutting costs amid relatively high labor costs and rising component prices in South Korea.

In 2019, the highest monthly wage in Vietnam ranged from $126 to $180, according to the National Wage Council.