Samsung Electro-Mechanics is going to shut down its HDI (high-density interconnected) printed circuit board manufacturing unit in Jiangsu, China, due to low profitability, according to a report by The Korea Herald.
On December 12, the company announced that it will suspend the production and sales activities of Kunshan Samsung Electro-Mechanics and dispose of its assets. The Chinese subsidiary has suffered consistent deficits due to rising labor costs and strong competition from local suppliers who can afford to undercut Samsung.
The news of the shutdown comes just a couple of months after Samsung decided to pull the plug on its smartphone manufacturing operations in China. This goes to show how competitive local companies can be, and further accentuates Samsung’s lack of influence in the Chinese mobile market.
Samsung Electro-Mechanics’ Substrate Solution Division, which produces HDI substrates, recorded deficits from 2014 to 2018, and the proportion of its sales in the company’s total sales fell below 20% for the first time last year. Furthermore, Samsung Electronics’ share of the Chinese smartphone market fell to less than 1%, making it difficult for Samsung Electro-Mechanics to make a profit in the Chinese market.
The Chinese HDI substrates production in China will be reorganized and moved to Busan, Korea and Vietnam.