According to information taken over by Reuters, LG plans to outsource much of its smartphone production to ODM partners, using the proceeds from licensing its brand image to save its mobile phone business.
Following in the footsteps of rival HTC, LG will try to cover the losses of the Mobile division by outsourcing part of the smartphone production for the low-end and mid-range segment. In the new organizational formula, the South Korean company hopes to be able to compete better in the high-end segment, concentrating the available resources on the development and maintenance of a smaller but more competitive product portfolio.
The news comes after several years in which the activity of the LG Mobile division took place with constant financial losses, covered by directing funds from other more profitable branches of the company.
Once upon a time, a reference name alongside Samsung, LG is no longer even in the Top 5, the ranking being dominated by Chinese manufacturers such as Huawei, Xiaomi and Oppo.
However, if the low-end segment doesn’t matter too much whether or not LG-signed smartphones come from their own factories, this detail could bother mid-budget shoppers, especially if the practice used since October comes and other disadvantages. Increasingly dependent on the relationship with ODM partners, LG will not be able to impose as easily a clear differentiation of the brand through design features and features that are not found in competition, over time, losing even more competitiveness.