18 December 2019
LG has announced that it will be making use of ODMs (Original Device Manufacturers) for releasing future mid-range phones. It has been using ODMs for releasing budget smartphones for quite some time and with this announcement, only flagship-level models will be manufactured by LG itself.
The decision has been taken to ensure that LG can price its mid-range phones competitively and compete with Chinese rivals. It is a well-known fact that China-based smartphone makers have been releasing entry-level and mid-range phones which offer impressive value for money ratio. This strategy has helped them dominate both these price segments in China as well as other emerging markets like India. Eventually, other brands like LG have been facing the heat for too long now.
Jae-Seok Shin, Head of Project Management Team at LG Electronics' Mobile Communications Division said:
“We will use the ODM as a lever for improving the cost structure of the smartphone business. We have been making efforts to raise cost competitiveness by reducing fixed costs and optimizing production sites. We will expand the application of ODM from existing low-end smartphones to mid-range phones."
It is unknown when we will start seeing these new ODM-made LG smartphones but we can expect it to happen from next year. LG is not the only global brand to follow the ODM strategy in China. Samsung has also released a few mid-range phones through ODMs in the country with the same goal of taking on Chinese players. But only the time will tell if this change in strategy will make any substantial difference to LG's fortunes.