Samsung plans to expand its airconditioner manufacturing capacity in Thailand from the current 800,000 units to as many as 3 million units in keeping with the remarkable sales growth in 2010, which is expected to double from last year.
"The company is finalising the size of the investment," Sasitorn Khoopatanakul, group airconditioner business leader of Thai Samsung Electronics, said yesterday.
She said the company would have to purchase land for construction of a new factory and install advanced technology for the manufacture of airconditioners.
The company will begin construction of the plant this year and manufacturing will begin next year.
Previously, Samsung's head office in South Korea was inclined to choose Vietnam for expanding airconditioner output instead of Thailand because of the political turmoil over the past few months. However, Thai Samsung Electronics made its case to the powers at headquarters that the performance of the airconditioner segment was much better in Thailand than in Vietnam. After deliberations, headquarters decided a month ago to expand manufacturing capacity in Thailand, Sasitorn said.
Thai Samsung Electronics has manufacturing plants for many homeappliance products in Sri Racha, Chon Buri province. The additional capacity will serve both domestic and export markets.
Somporn Jangreenapawong, business leader for room airconditioners, said that since the period of the political unrest, many South Korean firms had moved their business from Thailand to Vietnam.
"But we persuaded the Samsung headquarters to invest more in Thailand because the market for airconditioners here is seeing dramatic growth, up 130 per cent this year, though Thailand and Vietnam have the same market size," he said.
He added that the penetration rate for the airconditioning market in Thailand was now only 18 per cent, but the company forecasts the rate should reach 30 per cent within 10 years.
"The good thing is that we can pull huge investment to Thailand despite the lack of confidence among foreign investors," he said.
Sasitorn said Thai Samsung had revised upward its target for the second time for airconditioning sales to 200,000 units from 140,000 units as targeted previously.
"We sold 140,000 airconditioner units in the first half of the year. So we've already accomplished our sales target this year. We believe that it is possible for Samsung to record sales volume of 200,000 units this year," she said.
The key drivers to drastic growth in the first half were expanded distribution channels and rising market demand.
The total airconditioning market in Thailand this year is expected to grow by 35 per cent in volume to 1 million units and 30 per cent in value to Bt12 billion, Thai Samsung Electronics estimates.
Samsung airconditioners have a market share of 17 per cent so far this year, up from 14 per cent last year, and it is expected to grow to 20 per cent by the end of this year.