Seoul, South Korea – Samsung Electro-Mechanics (SEMCO) has officially closed its Kunshan, China-based High-Density Interconnect (HDI) manufacturing plant, a facility that had been in operation for 15 years. The move signals a strategic shift towards higher value-added businesses, including advanced semiconductor substrates and Multilayer Ceramic Capacitors (MLCCs).
According to SEMCO’s 2024 audit report released on February 24th, the liquidation process for Kunshan Samsung Electro-Mechanics Co., Ltd., which began in late 2019, was completed at the end of last year. This marks the company’s formal exit from the HDI, or smartphone mainboard, business.
Established in 2009, the Kunshan plant faced increasing competition in the Chinese market, leading to a significant decline in profitability. In December 2019, Samsung Electro-Mechanics made the decision to withdraw from the operation.
This closure follows the liquidation of Dongguan Samsung Electro-Mechanics Co., Ltd. at the end of 2023, which was Samsung Group’s first factory in China. With these closures, Samsung Electro-Mechanics now operates only two factories in China: Tianjin Samsung Electro-Mechanics Co., Ltd. and Samsung High-Tech Electro-Mechanics (Tianjin) Co., Ltd.
Analysis:
This strategic shift by Samsung Electro-Mechanics reflects a broader trend among multinational corporations to re-evaluate their manufacturing footprint in China amidst rising labor costs, increasing competition from local players, and evolving geopolitical dynamics. By focusing on advanced semiconductor substrates and MLCCs, SEMCO is positioning itself in higher-margin, technologically advanced sectors with strong growth potential.
The decision to exit the HDI business highlights the intense competition in the smartphone component market, where Chinese manufacturers have rapidly gained market share. While the closure of the Kunshan plant represents a reduction in SEMCO’s manufacturing capacity in China, it also demonstrates a commitment to optimizing its portfolio and focusing on areas where it can maintain a competitive edge.
Future Outlook:
The closure of the Kunshan plant and the focus on advanced semiconductor substrates and MLCCs suggests that Samsung Electro-Mechanics is prioritizing long-term profitability and technological leadership over maintaining a broad manufacturing base. It remains to be seen how this strategic shift will impact the company’s overall performance and its position in the global electronics supply chain. However, the move underscores the importance of adaptability and innovation in a rapidly changing global market.
References:
- Yonhap News Agency. (2024, February 24). Samsung Electro-Mechanics Shuts Down Kunshan Plant, Exiting Smartphone Mainboard Business. Retrieved from [Original article URL – if available]
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