Samsung Reducing Its Smartphone's Production

 All around the world smartphone market is expected to see a dip in demand as fears of a recession grow. This is the main reason the world’s leading smartphone manufacturers have been reducing production. They wouldn’t want to be sitting on huge stocks of unsold phones and dont want to kept accesive stock. Accesive stock wouldn't only increase inventory level but it will also increase holding cost. 

It appears that Samsung smart phone production company is already facing this challenge.  Accordt to new report Samsung has a whopping 50 million units stuck in distributor stock. These phones have not been sold to final consumers and are just lying idle with Samsung’s distributors across the globe.

Samsung’s mid-range phones are not selling well

Samsung is reportedly calculating shipments of 270 million smart-phones in the year of 2022. 50 million is roughly 18 percent of that. It paints a worrying picture. 18 percent of Samsung’s entire expected smartphone shipments for the year are currently unsold. Normally, unsold inventory is usually around 10 percent of total shipments.

This indicates that Samsung may be seeing less demand for its smartphones as compared to previous years. While you might think that the more expensive flagship and high-end devices will be the most affected, that’s not the case. It’s the mid-range Galaxy A series that makes up the vast majority of smartphones in the inventory that remain unsold.

Low demand for Samsung’s affordable devices suggests that customers who purchase phones in this price range are bearing the brunt of the global economic situation. For someone struggling with their finances buying a new phone, no matter how affordably priced it might be, is not going to be at the top of their priorities.

Samsung was reportedly manufacturing 20 million units of smartphones monthly from January to February 2022. It has decreased production by half to just 10 million units in the month of May, likely responding to high inventory levels and low demand. It was reported last month that Samsung has decided to decrease its smartphone production by 30 million units this year.

Whether the situation improves remains to be seen. In the meantime, Samsung may continue to limit production so that its unsold inventory problem doesn’t get out of hand.

But for now Samsung is reducing its production.