Samsung may suspend production at Chinese phone factory due to sales slump

The company says it's "focused on raising the efficiency" of its Tianjin factory.

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Samsung may stop making phones at one of its factories in China, a report says.

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Samsung is reportedly looking into suspending operations at one of its phone manufacturing plants in China as sales fall and labor costs rise.

It may stop making phones at Tianjin Samsung Telecom Technology, according to Reuters, which cited South Korea's Electronic Times. Samsung told the news agency Monday that the fate of the factory, which is located in the northeastern city of Tianjin, hasn't been determined.

A slowdown in demand for Samsung's newest phones, the Galaxy S9 and S9 Plus, hurt its second quarter earnings this year, with revenue in its mobile division declining 22 percent in the quarter to 22.67 trillion won ($20.2 billion).

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It also warned that "market condition will likely remain challenging in the second half amid pricing competition and new product launches."

Last Thursday, Samsung launched its new Galaxy Note 9 flagship phone at the Barclays Center in New York

The Tianjin factory is one of two in China, according to Reuters, and makes 36 million phones a year. Its other plant, located in the central city of Huizhou, produces 72 million units each year.

"As the overall smartphone market faces slowing growth, Samsung is currently focused on raising the efficiency of our operations in Tianjin Samsung Telecom Technology," a Samsung spokesperson said in a statement. "No decision has been made on the withdrawal of the Tianjin operations."

The company has focused on production facilities in Vietnam (where its two factories make a combined 240 million units a year) and India in recent years.

Earlier this month, its cheaper competitor Huawei forecast 200 million shipments and announced its hopes to take Samsung's throne as world's largest phone vendor by the end of 2019.

First published on Aug. 13 at 3:01 a.m. PT.
Updated on Aug. 14 at 7:38 a.m. PT: Adds Samsung comment.

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