Most Korean-brand handsets made in China, India, Vietnam

It’s a well-known fact that Korea’s Samsung Electronics and LG Electronics are the world’s No. 2 and No. 3 mobile phone manufacturers, but the majority of their handsets are now no longer made in Korea, according to new data.

The National IT Industry Promotion Agency said yesterday that 58 percent of the 354.8 million handsets that were shipped by Korean mobile phone manufacturers last year were made abroad, the first time that overseas production exceeded that of domestic production.

Local mobile phone makers have stepped up foreign production to take advantage of lower labor and facility costs, it said

In 2008, overseas production stood at 46 percent and just 37 percent in 2007.

“Korean companies have been increasing overseas production of their handsets recently to lower costs and enhance production capacity. Samsung, for instance, is doing so in China, Vietnam, India and Brazil, and LG in India and Brazil,” the agency’s report said.

This has been hurting Korea’s exports of mobile phones. According to the Ministry of Knowledge Economy Monday, the country’s exports of handsets declined by 14.8 percent in March to $2.04 billion from a year ago due mainly to the expansion of overseas production. The downward trend is not limited to March. Exports of mobile phones in the first quarter also dropped 11 percent to $6.5 billion.

The agency predicted that Korean companies will continue to increase overseas production. It said that mobile phone makers had been making high-value handsets in Korea and less expensive models overseas until recently, but more premium mobile phones are now being produced abroad.

“Establishing global production systems has been our policy for some time. With that in mind, we will continue to expand overseas production,” said Park Cheon-ho at Samsung’s PR division.

According to a report by London-based research firm Strategy Analytics, the top three suppliers in 2009 were Nokia with 38 percent of the market, Samsung with 20 percent and LG with 10 percent.

By Kim Hyung-eun [hkim@joongang.co.kr]