Trump’s tweet could box Samsung into corner

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Trump’s tweet could box Samsung into corner

On early Friday morning, U.S. President Donald Trump uploaded a “thank you” tweet to Samsung Electronics about the possibility of the home appliances giant expanding its manufacturing in the United States.

The message, which read “Thank you, @Samsung! We would love to have you!,” contained a link to a post on Axios, an American online media outlet that said, “Samsung is considering constructing a U.S. factory to produce home appliances, per Reuters.”

Trump’s tweet and the media interest that followed put unusual pressure on Samsung, which has made public no definite plans. Even the Reuters article that spread the news in the first place came from an anonymous source. Although the tech giant has hinted several times about expanding investments in the United States, it has never officially released concrete plans to establish manufacturing facilities there.

“The company always devises new strategies according to industrial or political landscape changes,” said a Samsung Electronics spokesman. “Likewise, bringing manufacturing facilities for home appliances to the U.S. is an ongoing discussion, but for now, nothing is decided.”

The judgement is not an easy one. A factory in the United States would undoubtedly be expensive for Samsung in terms of operating and labor costs and pricey land. U.S-based Whirlpool is the only major home electronics manufacturer that has factories in the country.

The only definite investment plan Samsung Electronics has confirmed was $1 billion it promised to pour into a semiconductor factory in Austin, Texas, during the first half of this year. The other manufacturing facility Samsung Electronics has in the United States is the Los Angeles factory of Dacor, a luxury kitchen appliances company Samsung acquired last year.

Samsung’s home appliances sold in the U.S. are mainly manufactured in Mexico, where the company operates major factories in Tijuana and Queretaro. Mexican products are able to cross into the United States without tax according to the Nafta agreement.

But Trump has vowed changes to that arrangement, including a Nafta renegotiation. Trump has also said he wants to impose a 20 percent import tariff on Mexican products to raise money to build a border wall.

North America is an important market for Samsung Electronics. It topped the list of U.S. consumer electronics with 17.3 percent market share during last year’s fourth quarter, according to American market research firm TraQline.

The issue is equally crucial to LG Electronics, who ranked third on TraQline’s list. Like Samsung, it also has factories in Mexico and none inside U.S. borders. At the Consumer Electronics Show last month in Las Vegas, company CEO and Vice Chairman Jo Seong-jin said that LG would decide on whether to build manufacturing facilities in the United States in the first quarter of this year.

BY SONG KYOUNG-SON [song.kyoungson@joongang.co.kr]

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