22 May 2019
South Korea’s LG Electronics is planning to suspend manufacturing of its loss-making mobile phones and is planning to shift the production to its existing plant in Vietnam, according to a new report.
Yonhap News Agency reported that LG decided to move its local handset production to Vietnam in a bid to turn around its money-losing smartphones division. LG’s mobile business has seen seven red quarters and with the increasing price competition in the global TV market the company is slated to have a bad quarter, analysts believe.
In Q4, 2018, LG reported a loss of $72.5 million (or 80.7 billion Korean won). The company’s loss-making smartphone business lost more than $700 million in 2018. LG’s appliance and TV businesses are performing well, however, its mobile division has been losing money for a while now.
LG’s production bases for smartphones in South Korea, China, Vietnam, Brazil and India, and the South Korean factory manufactures premium models, which accounts for 10% to 20% of the firm’s total smartphone output.
"I do think that the pressure to differentiate is pushing LG to add features more to be different than really to deliver value to the user — tech for tech's sake." — Carolina Milanesi, Creative Strategies stated.
LG Electronics has declined to comment on the report.
A number of smartphone makers including LG have been struggling to sell mobile phones, as the competition is increasing. IDC reported a slump in overall smartphone sales in 2018. In Jan, Apple Inc also revised its sales forecast for the year. Samsung which remains the leader in the smartphone market has also reported a soft response to its sales.