- 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 invest more research into high-end phones.
LG is adopting a new strategy in its ongoing effort to reverse the money-losing phone business: Let other companies do more of the work. Reuters reports that LG has reorganized its cellular division to outsource more budget and mid-range phones. Your entry-level handset may have an LG badge on it, but others have designed and manufactured it.
The Korean tech giant has created a new leadership role to better handle outsourcing, cutting some research and manufacturing jobs while moving others. Internal work is now focused on premium phones.
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LG announced in October 2019 that it would be expanding its outsourcing from budget phones to mid-range devices.
It’s not a surprising decision. LG was one of the largest phone manufacturers a few years ago, but the market has changed. Chinese providers such as Xiaomi and Oppo are now widespread, which is supported not least by inexpensive phones. These are more of LG’s main competitors than high-end heavyweights like Apple and Samsung, said Counterpoint analyst Tom Kang Reuters.
Whether or not LG is successful is a different story. Chinese brands have reputational and manufacturing advantages inherent in their homeland (not to mention key markets like India) and have spent years refining their designs and marketing. LG can step up its budget phones, but still has to hold its own in places where its name doesn’t affect nearly as much.