LG says it will stop working on its own low-end smartphones.
The South Korean company has reorganized its mobile phone division and now plans to increase the outsourcing of its low-to-mid-range handsets. According to several analysts, this is so that the company can cut costs and compete against its Chinese rivals.
LG’s mobile business has reported an operating loss for the 22nd consecutive quarter. The company is now creating a new management title that it calls its original design manufacture (ODM). This term refers to companies that will now make phones and use the LG label.
The tech maker has also gotten rid of some of its research and production positions and reshuffled others, said a spokeswoman to Reuters. The company did this so it can focus its in-house R&D and production on premium phones.
“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 to Reuters. “But even if LG sources its products, without marketing ability, it cannot win against Chinese firms who are good at it,” Kang added.
LG was once a top-leading smartphone manufacturer but in recent years isn’t even among the leading five. Over the last few years, the company has rapidly lost ground to Huawei, Xiaomi, Oppo and Vivo, with Apple and Samsung still in their very high positions.
However, with LG shifting its focus to premium smartphones, interesting devices from the company might be coming in the next few years.