On Dec. 12, Samsung Electro-Mechanics’ board passed a resolution to suspend the firm’s smartphone High Density Interconnection board business in Kunshan of China. The firm said the remaining assets of the Kunshan plant would be sold off.
“Revenues are likely to fall in terms of consolidated financial statements due to the suspension of the HDI business, but in the long run, it would be a positive factor cutting losses,“ said Samsung Electro-Mechanics in a statement.
The HDI orders that the firm has been handling for Samsung Electronics’ Galaxy series have now been allotted to other suppliers such as Korea Circuit and DAP.
HDI PCBs are much less profitable compared to semiconductor package boards, thereby making it difficult for conglomerates to produce due to their already-sizeable overhead such as labor costs. In October, the Elec reported that Samsung Electro-Mechanics would be undergoing painful restructuring of its HDI business to cut costs and losses.
The Kunshan plant, in particular, had been suffering from years of deficit due to sluggish sales of Samsung smartphones in China and the rise of cheaper competition. Currently, Samsung smartphones account for less than 1% of the Chinese market. The PCB Solution Division that produces the HDI boards was in the red from 2014 up until 2018.
The HDI business will now be merged with the Samsung affiliate’s Vietnamese plant; the HDI production line in Busan will be moved to Vietnam by the end of this month.
Meanwhile, LG Innotek has also announced the end of its HDI production. In November, it said that it would no longer be in the business.
The Elec is South Korea’s No.1 tech news platform.