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

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

Although ranked No.3 in the global smartphone market in Q1 2013 by Strategy Analytics, LG did not even make the top seven in Q3 this year after losing ground to Chinese smartphone makers like Huawei, Xiaomi, Oppo and Vivo, research says the firm Counterpoint.

LG Electronics said on Monday it had revamped its mobile phone division to increase outsourcing of its low and mid-range smartphones, which analysts said was an attempt to cut costs and compete with Chinese rivals.

LG's mobile communications business, which has recorded an operating loss for 22 consecutive quarters, has created a new executive title for Original Design Manufacturing (ODM), a spokesperson for the South company said. Korean.

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

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

"He knows he's competing with his Chinese competitors, not Apple or Samsung, and he's trying to increase the value of his low-end models for the price, using original design manufacturers that Chinese companies use." , Tom Kang, analyst at Counterpoint, said.

“But even if LG buys its products, without marketing capacity, it cannot win against Chinese companies that are good in this area,” Kang added.

LG announced in October last year that it would extend ODM to its mid-range smartphone line from low-end smartphones.