North Korea analyst Martyn Williams suspects the phones may actually be produced in China and then quietly shuttled across the border so that North Korean workers can pretend to have built them. The Arirang phones, he writes, "are probably made to order by a Chinese manufacturer and shipped to the [North Korean] Factory where they are inspected before going on sale."
So why would Kim be so excited about showing off the North Korean smartphones if they're neither really North Korean-made nor yet usable as smartphones? Why would he take the remarkable step of endorsing precisely the sort of technology that his government has worked so hard to keep out? It may partly be his background; as a young student in Switzerland he was exposed to and apparently enjoyed spending time in the outside world. He's previously been spotted with a smartphone at his side, a first for a North Korean leader.
The more likely explanation, though, is that North Korean officials may want to tamp down any internal North Korean demand for outside smartphones and get people to use these cheaper, officially approved phones instead. Outside technology has been creeping across the China-North Korea border since the 1990s famine forced officials to allow more black-market trade, but the Kim regime rightly fears technological encroachment, which risks allowing outside information to seep into this carefully engineered society. And North Korean demand for smartphones has reportedly been rising. Kim may hope that he can curb this demand by offering his own, easier-to-access smartphones, which are presumably designed to allow the government to monitor or at least prevent any infiltration of the national information cordon.
Here are some more photos, via North Korean state media, for your enjoyment, of Kim's visit to the smartphone "factory." It's a sign of how much the world is changing outside North Korea, and of the country's inability to resist all change but its penchant for adapting.