Global economic headwinds are accelerating with impacts that are not only inducing inflation, but also are forcing companies to downsize their operations. Spiked by the Russia-Ukraine war, economies that have made progress recovering from covid strains are now facing another challenge that experts say may lead to global recession.
This means that companies must once again strategize to withstand the economic storm that has disrupted the global supply chain amid scarcity of goods and services. There is also the cautionary spending lifestyle that consumers are largely adopting to cope with the rising cost of goods and services, impacting sales, especially of tech devices.
Consequently, Samsung has become the first major company to make a significant change in its business. A report on Samsung mobile website said the company is having to adapt to these challenges as it seeks growth in the smartphone market. Citing a new report out of South Korea, which suggests that Samsung has decided to cut its phone production by 30 million units this year, the report pointed to global economic downturns forcing other companies to also follow the same path.
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Global economic situation forces Samsung to make the cut
Other companies have reportedly taken similar steps in the face of this challenging economic environment. Apple is believed to have cut its smartphone production for 2022 as well. The company is reportedly cutting production of the iPhone SE by 20%.
The report mentions that Samsung is cutting production targets across its low to mid-end and flagship models. Samsung was reportedly going to produce 310 million units of smartphones in 2022 but it has now decided to cut that back to 280 million units.
The company had initially aimed to produce 300 million units in 2022 as it has yet to hit this figure after 2017. However, the global economic situation has dented demand and the company has to react.
Inflation is at its highest in key markets across the globe. This causes people to limit expenditures on items they don’t immediately need. Market analysts expect this to be a major reason why sales of affordable devices may also decline this year.