LG Electronics restructured its ailing mobile communications division in an apparent attempt to cut costs, Reuters reported, with measures including an increase in outsourcing of design and manufacture for mid- and lower-tier devices.
Quoting a manufacturer representative, the news publication added the company had changed around its R&D and production facilities with the aim of focusing its in-house efforts on its premium line.
Although showing sequential and year-on-year improvements in Q3, the company continues to lose money from its mobile communications segment: operating loss in the quarter was KRW148 billion ($136.1 million).
In January the company warned it expected the unit to suffer from “severe competition” in selling 5G handsets [1], noting the success of the division hinged on its ability to sell mid- to high-tier devices to the mass market.
Later in the year, it warned pandemic-related production issues would further hamper progress [2].
Although launching a spate of mid- and lower-tier devices in 2020 [3], it has also attempted to differentiate its offering in the premium segment through the LG Wing [4] from its Explorer Project segment, a unit charged with bringing high-end devices with original form factors to market.
Prior to the latest move, LG already outsourced a number of elements for its branded devices at the value end of the market.
[1] https://www.mobileworldlive.com/devices/news-devices/lg-pins-mobile-hopes-on-5g-as-woes-continue
[2] https://www.mobileworldlive.com/asia/asia-news/lg-braced-for-covid-hit-on-q2-figures
[3] https://www.mobileworldlive.com/devices/news-devices/lg-bolsters-value-tier-smartphone-line-up
[4] https://www.mobileworldlive.com/featured-content/devices-home-banner/lg-takes-alternative-angle-on-second-screen
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