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Samsung Electronics ceased notebook computer production in South Korea last month, relocating its entire domestic production facility to China.
The electronics giant relocation of notebook computer production lines to China is expected to once again trigger controversy about the hollowing out of the domestic manufacturing industry.
Major Korean electronics makers have been asserting that they would relocate domestic plants for low-end electronics goods to China but are increasingly repositioning their production facilities for high-end, high value-added information technology products in an attempt to gain an edge in price competition with foreign rivals.
The electronics heavyweight suspended domestic production of microwave ovens at home last year.
Samsung Electronics completed the relocation of its notebook production facilities to its Suzhou plant in China in the first quarter of this year and shut down its production lines in the Suwon industrial complex last month.
Following the relocation, only research and development (R&D), marketing and product development functions of Samsung notebook PC operations will remain in Korea. Annual notebook production of Samsung Suwon plant continued to shrink from 483,000 units in 2002 to 451,000 units in 2003 and 128,000 units last year.
As Samsung produces its desktop PCs by outsourcing the production of them to local small- and mid-sized PC makers in the form of original equipment manufacturing (OEM), relocation of its notebook production lines to China translates into the complete suspension of PC production in Korea.
We decided to centralize our notebook computer production lines in China to avert China high tariffs imposed on information technology products and to slash a heavy labor cost burden, a Samsung Electronics spokesman said.
warming to China is a global trend. Major PC makersproduction bases are rapidly moving to China and roughly 90 percent of worldwide PC production is churned out in China, he added.
Samsung Suzhou plant has an annual notebook production capacity of 1 million units. The Chinese production affiliate also produces digital media products such as digital versatile disc (DVD) players, digital televisions and color monitors.
The electronics maker plans to boost the share of overseas production of digital media products to 90 percent by year end from 85 percent last year.