Samsung has announced plans to set up a handset manufacturing facility in Indonesia, to produce devices mainly for the domestic market.
The company is in talks with the Indonesian government to build a factory in West Java, Reuterssaid.
According to government officials, the facility would have an initial production capacity of 100,000 units per month, and this capacity would eventually be scaled up to around 900,000 units per month.
The announcement is the latest indication of the growing importance of Indonesia to the global handset industry, both as a market and a manufacturing destination.
In February, manufacturing giant Foxconn revealed it is considering spending up to $1 billion to build a plant in Indonesia, as it seeks to diversify production away from China.
Foxconn is waiting until the new government takes office in October to make its decision, and the incoming president is perceived by some as more business friendly than his predecessor.
Another factor that could be influencing the decision is the fact that the Indonesian government is considering imposing a 20% value-added tax on high-end smartphone models - and potentially all mobile phone imports – in a bid to stem the tide of imported devices. Producing handsets in Indonesia could help Samsung skirt this tax.