The fortunes of LG Mobile, the embattled and rather overshadowed rival to Samsung Mobile, have been on a downward trajectory for a long time. As part of its effort to reform and optimize that business, LG is now taking the step of discontinuing smartphone manufacturing in its home country of South Korea. The news was originally reported by the local Yonhap News Agency, via Reuters, and has since been confirmed by LG. LG will relocate its Pyeongtaek, South Korea phone production to its Haiphong Campus in Vietnam, and the majority of the staff from Pyeongtaek will be moved to working on LG’s home appliance business in Changwon, South Korea.
LG’s home manufacturing is presently focused on its flagship devices, with Reuters reporting that it accounts for somewhere between a tenth and a fifth of LG’s total phone output. There’s a lot of pride invested in putting the “Made in Korea” label on LG’s best mobile products, so this decision will not have been reached lightly. Then again, given the chronic failure of LG Mobile to turn a profit, it’s obvious that LG had to take measures to cut costs. Raising prices, the other path to balancing the books, seems an unlikely strategy for success at the moment, with LG lagging behind Android phone rivals with better cameras, bigger batteries, and smoother performance.
This is far from the end of LG’s mobile division, but it may be the beginning of the end. LG continues to occupy a privileged position as the third option after Apple and Samsung phones in most US carrier stores, and it enjoys a loyal following at home in Korea. But if it can’t produce competitive devices, its inability to sustain phone manufacturing at home may well spread to its cheaper plants overseas. At this point, only a series of great new phones is likely to stem the slow demise of LG’s consumer smartphone business.
LG has provided the following statement, confirming and elaborating on the news:
“As part of a larger strategy to improve our mobile business and to raise our competitive edge in an evolving industry, LG will be relocating its smartphone manufacturing operation from Pyeongtaek, South Korea to our newly expanded campus in Haiphong, Vietnam. This relocation is part of a broader capital investment to expand LG’s smartphone business as the Haiphong Campus, which commenced operation in 2015 with a USD 1.5 billion investment, is ideally suited to take on the task of producing high quality, competitive products for the global market.
“LG will benefit from the expansion of efficiencies and synergies as Haiphong was designed with the capability to manufacture a wide variety of products, from washing machines and TVs to auto infotainment systems and smartphones. The majority of the Pyeongtaek workforce will be relocated to Changwon, South Korea to support LG’s fast-growing home appliance business.”
Update, April 25th, 4AM ET: Added the statement from LG and amended the article to reflect that the move is official.