The Reasons for the Cut
in Production
The primary reason that seemingly
affected Samsung’s and Similar Company’s Production Process, is the Worldwide
worsening of the Economy in general, wrought on by firstly the Covid-19
Pandemic which has seeming brought numerous Companies across all Industries
down to their knees, and Samsung is no different. Having suffered two years of
Financial Constraints and Hardships, it does not come as a surprise then that
Samsung could not make Production quota for this Year, as it is already common
knowledge that the Mobile Chip Supply Chain Constraint is one of the most major
obstacles that all Mobile Phone Companies have faced and continue to face, over
these past two years. Moreover, another crucial aspect that further harmed
Samsung’s and its Competitor’s Production Process and Sales in general, is the
Russian assault and the subsequent conflict on Ukraine. This hampered Samsung’s
sales due to the fact that the Company followed suit along with other Tech
Titans like Apple and Microsoft by pulling out and suspending sales of their
Products from Russia, ultimately leaving Samsung with one less Market to
operate in. Adding onto all of the aforementioned issues is the ever-increasing
Worldwide Inflation due to the Pandemic and the Russia-Ukraine Conflict, which
has also left a noticeable blemish on Samsung’s Production process as well.
How the cut in
Production will affect Samsung’s Products
Another major aspect to take heed of is
the affect this decrease in Production could have on Samsung’s Phones and
Products. Reportedly, this lowered production will affect Samsung’s entire
Phone lineup, meaning that the full spectrum of Samsung Smartphones from the
lower-end Models to the Flagship Models will see a decrease in their Production
Units this year. This decision by Samsung may initially seem counter-intuitive,
however when considering the aforementioned onslaught of the Worldwide
Inflation, low supply of Mobile chips and the increased number of unemployed
labor due to the Pandemic, all this adds weight to the fact that the Purchasing
Power of People all across the World has significantly suffered. This indicates
that Samsung considered the worst-case scenario of their predicament which is
the ‘what if people don’t buy their phones at all’ scenario. This alternative
may be closer to reality now more than ever, as it can be assumed that people
could simply not afford to change or buy a new phone, since those people who
may need a Lower-end Phone may not buy it unless they absolutely have to, and
the people who already have a Flagship phone may decide to stick with it for a
couple more years.
The Broader Point of
View
Having focused on the troubles faced only by Samsung, these issues however do not relate exclusively to the Company, as the whole Tech Industry has taken similar steps in response to the adverse economic and social conditions found throughout the World. Samsung’s major competitor Apple has also been facing hardships akin to Samsung’s, during the past two years. Having planned to initially manufacture 240 Million iPhone units in 2022, they ultimately faced Flat Production numbers as they were only able to manufacture 220 Million Units, the exact number of Units that Apple Manufactured in the Year 2021. This similar downward trend in production faced by two of the most paramount Smartphone Manufacturing Companies in the World, indicates worrying and potentially subpar sales results for this Year. Will this declining trend continue to persist for the foreseeable future? Only time will tell.
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