Phone business

LG shakes up loss-making phone business to outsource low-end models

FILE PHOTO: A man walks past an LG logo at the Mobile World Congress in Barcelona, ​​Spain February 27, 2018. REUTERS/Sergio Perez

SEOUL (Reuters) – LG Electronics on Monday said it had reorganized its mobile phone division to increase outsourcing of its low-to-midrange smartphones, which analysts said was an attempt to cut costs and compete with rivals Chinese.

LG’s mobile communications business, which has posted an operating loss for 22 consecutive quarters, has created a new management title for original design manufacturing (ODM), a spokeswoman for the company said. Korean.

This is the outsourcing of the design and manufacture of smartphones, LG affixing its label on the product.

It also cut some research and production positions and reshuffled others, the spokeswoman said, as part of an effort to focus its in-house R&D and production on high-end smartphones, low and mid-range to be produced by ODM.

Although ranked No. 3 in the global smartphone market in the first quarter of 2013 by Strategy Analytics, LG did not even make the top seven in the third quarter of this year after losing ground to Chinese smartphone manufacturers like Huawei, Xiaomi , Oppo and Vivo, says research firm Counterpoint.

“It knows it’s competing with Chinese competitors, not Apple or Samsung, and it’s trying to add value to its low-end models for the price, using original design makers that Chinese companies use. “, Tom Kang, analyst at Counterpoint, said.

“But even if LG is sourcing products, without marketing capability, it can’t win against Chinese companies that do it well,” Kang added.

LG had announced in October last year that it would extend ODM to its range of mid-range smartphones starting with low-end smartphones only.

Reporting by Joyce Lee; Editing by Alexander Smith