Samsung trebles mobile handsets capacity

Samsung, the Korean consumer electronics major, is expanding manufacturing base in India by trebling its mobile handset production capacity in Noida to 36 million per year from the current 12 million at an investment of around $70 million.

The Korean behemoth, which is engaged in a fierce battle with rivals for market share in developed market, would be consolidating its position in the local market with this move that could help it zip past bigger rival Nokia.

Currently, Samsung is the second-largest player in the cell phone market with a market share of around 25%.

Just two years back it had barely 6% market share. Nokia is ahead of Samsung, but is growing at a much slower pace than its Korean counterpart.

Ranjit Yadav, senior vice-president, mobile & IT biz, Samsung Electronics, estimates the mobile phone sector was growing at 70-80%.

Samsung earns close to 50% of its revenues from mobile phones and the rest 50% comes from consumer electronics.
Yadav said even though 60% of the phones manufactured at its facilities were in the lower-end, margins were better at the high-end that constitute 40%.

He said scaling up capacity will help the company to further bring down mobile phone prices, which are currently in the range of Rs1,000 to Rs35,000.

Yadav said after going in for basic phones in the initial phase, most consumers were now upgrading to the higher end.
This, he said, was spurring new demand.

“This (upgradation) is the segment where the demand was the highest,” he said. According to him, the upgradation cycle of consumers has shrunk to 18-24 months today compared to over 24 months two years back.

As per industry estimate, mobile phones sales were close to 12-13 million per month.

Besides the domestic market, Samsung was also looking to feed the overseas market with the mobile handsets manufactured in India.

It is already exporting cell phones produced in India to South Asian countries and was looking to now tap the Middle East and African markets.

“Today, exports (of mobile phones) constitute a very small portion of our total revenues but it will grow over period,” said Yadav.
The Indian mobile phone market has seen intense competition among mobile handset players with the entry of new local players at the lower end.

These players are fast grabbing market share from established players

For instance, Karbonn Mobiles, which entered the market only two years back, has cornered 3% of the market.

Another local player Maxx Mobile is also fast gaining ground.

Overseas players such as Philips are also re-entering so as to not miss the action.