LG said on Monday that it has reorganized its mobile phone division to increase outsourcing of its low-end smartphones. Analysts said this is an attempt to cut costs and compete with Chinese competitors.
A spokesperson for the South Korean company said that LG’s mobile communications business reported losses for 22 consecutive quarters, creating a new management title for the original design manufacturer (ODM).
This refers to outsourcing the design and manufacturing of smartphones to LG and attaching its labels to products.
The spokesperson said that it also abolished some research and production positions and reorganized other positions as part of its internal R&D and production efforts to focus on high-end smartphones. Low-end and mid-end smartphones will be produced by ODM.
Although ranked third in the global smartphone market by Strategy Analytics in the first quarter of 2013, LG did not even rank among the top in the third quarter of this year after losing its status as Chinese smartphone manufacturers such as Huawei, Xiaomi, Oppo and Vivo. Seven research company Counterpoint said.
“It knows that it is competing with Chinese competitors rather than Apple or Samsung, and it is trying to increase the price of its low-end models by using original design manufacturers used by Chinese companies,” Tom Kang’s analyst said.
“However, even if LG purchases its products without marketing capabilities, it cannot compete with Chinese companies that are good at the product.”
LG said in October last year that it will expand ODM from low-end smartphones to its mid-end smartphone lineup.
© Thomson Reuters 2020
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