Samsung says it has ceased mobile phone production in China, following its rising labor costs and economic slowdown
SEOUL (Reuters) - Samsung Electronics Co Ltd (005930.KS) has ended mobile telephone production in China, it said on Wednesday, hurt by intensifying competition from domestic rivals …
Context & Ripple Effects
Samsung's exit closes a long retreat that began with competitive erosion at home in flagship phones — the fifth straight quarterly profit drop after the Galaxy S6 shortfall was an early warning that its premium hardware lead was narrowing. By 2019, rising labor costs and a slowing economy pushed its last China phone lines out, ending a manufacturing footprint that once anchored its global volumes.
The move fits a wider unwinding: Samsung Display ended all LCD panel production in South Korea and China by end-2020, and rival LG Electronics had already concluded that money-losing handset operations were unsalvageable via its smartphone business termination. The endpoint came years later when Samsung stopped selling even TVs and appliances in China altogether.
First-order effects
- Samsung's Chinese factory workforce loses its mobile production role immediately, and the company's handset output consolidates around its remaining overseas hubs — with its major Vietnam plant already carrying the volume burden.
- Chinese domestic brands inherit Samsung's vacated share outright, removing the last Korean-made handset presence from the world's largest phone market.
Second-order effects
- Concentrating production in Vietnam raises Samsung's exposure to any downturn there — a vulnerability confirmed in 2022 when [[a:981467|workers at its major Vietnamese smartphone factory reported cutbacks as global electronics demand slowed]].
- LG's earlier handset exit and Samsung's retreat together signal to other non-Chinese phone makers that competing on price against domestic rivals inside China is not winnable, accelerating their own pullbacks.
Third-order effects
- If the pattern holds, foreign consumer-electronics brands exit China category by category rather than fighting on cost — the sequence here ran from phones (2019) to panels (2020) to TVs and appliances, where Samsung's unit lost roughly $138M in 2025 before it ceased sales entirely.
- China's role in global electronics restructures from manufacturing-and-market for foreign brands into a market dominated by local champions, pushing multinationals toward Southeast Asian production and export-only postures.
The trend: Global consumer-electronics makers are systematically ceding the Chinese market to domestic brands while relocating manufacturing capacity out of China, one product category at a time.