People familiar with the move say that Samsung's plan of having the fifth of its cell phone production in China in 2020, may help the company compete with low-cost rivals like Huawei and Xiaomi, though it's going to be risky.
S amsung Electronics,which shut down its last in-house Chinese cell phone industrial facility in October, is transferring production of some Galaxy A models to contractual companies.
Samsung is quiet about the volumes of units in the planned China move but sources said the South Korean tech goliath plans to deliver somewhere in the range of 60 million telephones made in China by original design manufacturers (ODMs) in 2020 out of around 300 million gadgets.
Wingtech and different ODMs make telephones for numerous brands - including Huawei, Xiaomi and Oppo - for a minimum price.
Critics of this move of Samsung state it is in danger losing control of its quality and expertise by outsourcing, and may even help rivals by giving contractors the additional volume they need to bring down costs for all.
Likewise, Samsung cannot afford another quality crisis.
It stopped its flagship model Galaxy Note 7 in 2016 after reports that the costly phones were catching fires and postponed the launch of its folding phone this year after screen defects were found.
In any case, people familiar with Samsung's move state it has little choice but to follow its adversaries' practice of utilizing ODMs to cut costs.
"An unavoidable technique," a source with information on Samsung's Chinese planned m,ove said "instead of a decent methodology."
Samsung told Reuters that it has been making limited lines of cell phones outside its own plants to widen its portfolio and guarantee productive administration of the market.
Research firm Counterpoint says ODMs can acquire every one of the components required for $100-$250 cell phones for 10% to 15% lesser price than major brands with their own industrial facilities in China.
One supply chain source said Wingtech can get a few component parts for up to 30% less than what Samsung Electronics pays in Vietnam, where it has three manufacturing plants producing cell phones, TVs and home appliances.
Wingtech began making tablets and telephones for Samsung in 2017, representing 3% of its cell phones.
That production is expected to hit 8%, or 24 million units this 2019, as indicated by IHS Markit.
Sources said that the outsourcing plan of Samsung's include its lower and mid-range Galaxy A series with Wingtech taking part in both designs and production.
The A6S, one of the models to be outsourced, is prized at 1,299 yuan ($185) in China.
