Seoul, South Korea – February 24, 2025 – Samsung Electro-Mechanics (SEMCO), a key component supplier for Samsung Electronics and other global tech firms, has officially closed its Kunshan, China-based factory after 15 years of operation. This move signals the company’s strategic retreat from the smartphone High-Density Interconnect (HDI) mainboard business and a sharper focus on higher-value sectors like advanced semiconductor substrates and Multilayer Ceramic Capacitors (MLCCs).
The closure, detailed in SEMCO’s 2024 audit report released on February 24th, marks the culmination of a liquidation process that began in late 2019. Kunshan Samsung Electro-Mechanics Co., Ltd., established in 2009, faced increasing competition in the Chinese market, leading to a significant decline in profitability. The decision to withdraw was initially made in December 2019.
The decision to close the Kunshan facility reflects the intense competition within the HDI market, particularly in China, explains Dr. Eun-Kyung Lee, a professor of electronics engineering at Seoul National University. Companies like SEMCO are increasingly prioritizing segments where they can maintain a technological edge and higher profit margins. This often means focusing on components crucial for next-generation technologies like 5G, AI, and advanced computing.
The HDI market, while essential for smartphone manufacturing, has become increasingly commoditized, with numerous Chinese manufacturers offering competitive pricing. This has squeezed the profit margins of foreign players like SEMCO.
Furthermore, this isn’t an isolated incident for the Samsung Group in China. Dongguan Samsung Electro-Mechanics Co., Ltd., the group’s first factory in China, completed its liquidation at the end of 2023. With the closure of the Kunshan plant, SEMCO’s remaining manufacturing footprint in China is now limited to Tianjin Samsung Electro-Mechanics Co., Ltd. and Samsung High-Tech Electro-Mechanics (Tianjin) Co., Ltd.
This restructuring highlights a broader trend of multinational corporations re-evaluating their manufacturing strategies in China. Rising labor costs, increased regulatory scrutiny, and growing domestic competition are prompting companies to diversify their supply chains and prioritize higher-value manufacturing activities.
SEMCO’s shift towards advanced semiconductor substrates and MLCCs aligns with this trend. These components are critical for a wide range of applications, including data centers, electric vehicles, and advanced electronics. By focusing on these areas, SEMCO aims to secure its position as a leading supplier of high-performance components in the global market.
The closure of the Kunshan plant represents a strategic pivot for Samsung Electro-Mechanics, demonstrating a commitment to innovation and a focus on long-term profitability in a rapidly evolving technological landscape. While the exit from the smartphone HDI business may seem like a contraction, it ultimately positions the company for growth in more lucrative and technologically advanced sectors.
Looking Ahead:
The future for SEMCO lies in its ability to maintain its technological leadership in advanced semiconductor substrates and MLCCs. Investments in research and development, strategic partnerships, and a focus on quality will be crucial for success. It remains to be seen how this strategic shift will impact the overall supply chain for smartphones and other electronic devices, but it undoubtedly signals a new chapter for Samsung Electro-Mechanics.
References:
- Yonhap News Agency. (2025, February 24). Samsung Electro-Mechanics Shuts Down Kunshan Plant, Exits Smartphone Mainboard Business. Retrieved from [Insert original Yonhap News Agency article URL here – if available, otherwise remove this line]
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