LG Shakes Up Loss-Making Phone Business, to Outsource Lower-End Models

LG's mobile communications business has reported an operating loss for 22 consecutive quarters.

LG Shakes Up Loss-Making Phone Business, to Outsource Lower-End Models

LG had said last year it will expand ODM to mid-range smartphones line-up from just low-end smartphones

Highlights
  • LG has created a new management title for original design manufacture
  • This refers to the outsourcing of design and manufacture of smartphones
  • It has also abolished some research positions and reshuffled others

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

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

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

It has also abolished 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 premium smartphones, with low and mid-end ones to be produced by ODM.

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

"It knows it is competing with Chinese competitors, not Apple or Samsung, and it is trying to add to its lower-end models' value for the price, by using original design manufacturers that Chinese firms use," Tom Kang, an analyst at Counterpoint, said.

"But even if LG sources its products, without marketing ability, it cannot win against Chinese firms who are good at it," Kang added.

LG had said in October last year it will expand ODM to its mid-range smartphones line-up from just low-end smartphones.

© Thomson Reuters 2020


Are Micromax In 1b, In Note 1 good enough to take the brand to the top in India?? We discussed this on Orbital, our weekly technology podcast, which you can subscribe to via Apple Podcasts, Google Podcasts, or RSS, download the episode, or just hit the play button below.

Comments

For the latest tech news and reviews, follow Gadgets 360 on Twitter, Facebook, and Google News. For the latest videos on gadgets and tech, subscribe to our YouTube channel.

Further reading: LG
iPhone 11 Pro, iPhone SE, Infinix Note 7, Asus ROG Phone 3, and Others Get Discounts for Flipkart Mobiles Bonanza Sale

Related Stories

Share on Facebook Tweet Snapchat Share Reddit Comment
 
 

Advertisement

Advertisement

© Copyright Red Pixels Ventures Limited 2021. All rights reserved.
Listen to the latest songs, only on JioSaavn.com