LG outsourcing low-end, mid-range phone business to ODMs

There will be some changes going on inside LG. It’s all for the good of the company as the other South Korean tech giant wants to improve on the business. We don’t know for sure if and how many phones LG sells each year but we’re learning it is doing some reorganization to cut some costs. It’s been aiming to rival other Chinese OEMs and it can further improve by outsourcing its production of phones, at least, for the low to mid-range mobile devices.

There is no big public announcement by LG regarding this matter but the mobile communications business has seen big operating loss for about 22 consecutive matters according to a report by Reuters. A new management title for ODM is believed to have been created.

LG has removed some positions in the research and production group. There have been some reshuffling as well. LG is said to want to focus more in the R&D and production of premium flagship phones. As for the mid-range and low-end smartphones, they will be manufactured soon by ODMs.

Counterpoint’s analyst Tom Kang said: “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. He added, “But even if LG sources its products, without marketing ability, it cannot win against Chinese firms who are good at it.”

LG has been losing a lot to Chinese phonemakers the past few years. The likes of Xiaomi, Vivo, OPPO, and Huawei have proven to be bigger players and may continue to sell more. It no longer competes with Samsung or Apple so it will make sense and be more practical if it just outsources the other production lines to smaller companies.