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Electronics

Samsung invests $492m in India's first smartphone display plant

South Korean giant doubles down in India against China's Xiaomi, Oppo and Vivo

Samsung was the only smartphone vendor among the top five in India to report a drop in shipments during the third quarter of last year.   © Reuters

MUMBAI (NewsRise) -- Samsung Electronics is investing 35 billion rupees ($492 million) to set up India's first smartphone display manufacturing unit as the South Korean technology giant seeks to widen the range of products made in the South Asian country.

The move comes as Samsung Display, which supplies Apple and other big brands, is contending with slowing demand, rising competition from Chinese rivals and a shift to new technologies.

In October, the company said it plans to invest $11 billion in facilities as well as research and development to upgrade its production line over the next five years.

The investments show that Samsung is doubling down on India's smartphone market, where it faces intense competition from Chinese rivals such as Xiaomi, Oppo and Vivo.

The company in 2017 said it would invest 49.15 billion rupees in India to set up the world's biggest mobile phone factory in Noida, on the outskirts of Delhi. That plant now has the capacity to make 120 million handsets a year.

As part of the plan, Samsung India will offer a three-year loan of 35 billion rupees and transfer a parcel of land for 920.27 million rupees to Samsung Display's new unit, the Indian arm of Samsung Electronics said in a corporate filing, according to data intelligence firm Paper.vc.

A spokesman for Samsung in India declined to comment.

Samsung Display's India unit will mainly make, assemble, process, and sell displays as well as parts, components and accessories for all types and sizes of electronic devices, the filings show. The unit will also produce a range of mobile phone and information technology display products, according to the filings.

In the third quarter of 2019, Samsung saw its shipments to India fall 8.5%, while those from top vendor Xiaomi expanded 8.5%, according to data from International Data Corp. Second-ranked Samsung held an 18.9% share of the market, while Xiaomi led with 27.1%, the data show. Samsung's share slipped 370 basis points from a year earlier.

Samsung was the only vendor among the top five to report a drop in shipments during the quarter.

The company has been locked in a high-stakes battle for market share with Xiaomi over the past two years. Demand for smartphones in India is surging thanks to ultralow internet tariffs. In 2016, Reliance Jio Infocomm, billionaire Mukesh Ambani's wireless venture, offered free fourth-generation internet services for months, triggering a price war among providers.

Samsung, which offers more than a dozen models in India and has been a market leader since 2012, struggled to refresh its pricing and product portfolio, leaving room for Chinese rivals with inexpensive products to leapfrog it.

--Dhanya Ann Thoppil

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