South Korea’s LG Electronics on Thursday said it would stop producing smartphones in South Korea and move manufacturing to Vietnam, Reuters reported.
Following the move, LG would join global rivals in reorganizing production as they battle a slump in global demand.
The restructuring of its money-losing business comes as LG, once one of the world’s top three mobile phone makers, has seen its global market share spiraling to less than 3% in the decade that smartphones came to dominate the mobile market.
Analyst John Park at Daishin Securities commented the decision is positive, adding LG’s existence may be barely noticeable in the global smartphone market, but they have solid presence in the US market.
It is too early for LG to close the whole business when fifth generation (5G) networks are starting, Park said.
LG is ranked third in the US smartphone market, with a 17 % share as of the third quarter of 2018, data from market researcher Counterpoint showed, after Apple Inc and Samsung Electronics Co Ltd.
LG, whose smartphone business has been losing money for several years, said in a statement that shifting production will boost annual capacity of its smartphone plant in Vietnam by 83% to 11 million handsets from the second half of 2019.
It said Vietnam provides an “abundant labor force”, and that 750 workers at its South Korean handset factory would be relocated to its home appliance plant.
It has production bases for smartphones in South Korea, China, Vietnam, Brazil and India, and the South Korean factory mainly manufactures high-end models.
The shift comes after Samsung, the world’s biggest smartphone maker, said late last year it would cease operations at one of its mobile phone plants in China.