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LG hopes to revive phone sales by handing off work on cheaper models
- LG has reshuffled its mobile division to outsource more low-end and mid-range phones.
- This could cut costs and improve LG’s ability to fight Chinese rivals.
- The company will pour more of its research into high-end phones.
LG has a new strategy in its ongoing efforts to turn around its money-losing phone business: have other companies shoulder more of the work. Reuters reports that LG has reorganized its mobile division to outsource more of its budget and mid-range phones. Your entry-level handset may have an LG badge on it, but others will have designed and manufactured it.
The Korean tech giant has created a new management role to better handle the outsourcing, and has cut some research and production jobs while shifting others. It’s now focusing its in-house work on premium phones.
LG said in October 2019 that it would expand its outsourcing from budget phones to mid-range devices.
It’s not a surprising decision. LG was one of the largest phone makers several years ago, but the market has changed. Chinese vendors like Xiaomi and OPPO are now common sights near the top, helped in no small part by budget phones — those are LG’s main competition rather than high-end heavyweights like Apple and Samsung, Counterpoint analyst Tom Kang told Reuters.
Whether or not LG succeeds is another story. Chinese brands have inherent advantages in reputation and manufacturing in their home country (not to mention key markets like India), and they’ve spent years refining their designs and marketing. LG may improve its budget phones, but it will still have to compete in places where its name doesn’t have nearly as much sway.