Samsung (005930:KS) said today that it plans to set up a factory to produce mobile phones in Indonesia. A Samsung representative tells Reuters, “We have been discussing with the Indonesian government of our plan to produce mobile phones for the domestic market, so that we can meet local consumers’ need more effectively.”
Budi Darmadi, director general of high-tech industry at Indonesia’s industry ministry, informed Reuters that Samsung intends to produce as many as 900,000 phones per month in the plant in West Java – but it will start off with 100,000 units per month once the factory is completed. It’s not clear if these will be feature phones or smartphones.
But is this for real this time? There are have been two false alarms from Samsung about an Indonesia plant in the past two years. In September 2012 and February 2013, other Samsung executives spoke publicly about an Indonesian plant – but then the plans vanished into the ether.
Foxconn’s long drawn out plans for an Indonesia facility still hang in the balance after stretching on for about two years. The latest update from Foxconn (LSE:HHPD; HKEX:2038; TPE:2354) is that a decision will be made in October.
Indonesia is an attractive emerging market for many tech companies due to the large number of young consumers and the slowly expanding middle class.
While Samsung has gained a strong following among Indonesia’s new smartphone converts, a number of local phone brands are threatening Samsung with their own Android-based devices at lower prices. These include Smartfren, Mito, and Cyrus. Chinese firms like Xiaomi, Huawei, and Oppo are also targeting the Indonesian market.
Locally manufactured phones would give Samsung some kudos in Indonesia, and it would theoretically allow the company to avoid an upcoming tax on imported phones.