South Korea’s LG Electronics will sell off all of its smartphone manufacturing plants in Vietnam, China, and Brazil to Vietnam’s Vingroup as part of a split sale of the former’s mobile communications unit, a knowledgeable source told The Korea Times. This comes after news that the South Korean company is considering exiting the smartphone business altogether, prodded by mounting losses over the years.
“The Vietnamese government and Vingroup have been seeking to expand into high-tech industries and to boost local job creation. Also premium demand in the region including in Vietnam, Myanmar and Thailand is high,” a top industry official explained to The Korea Times.
He added, “They are only seeking to purchase the manufacturing facilities, while LG plans to continue its R&D, but with a reduced staff that will be stationed here at its Korean headquarters. Vingroup has presented the best offer among other potential buyers.”
Vingroup is one of the largest conglomerates in Vietnam, and wants to expand into the high-tech sector by acquiring and leveraging LG’s advanced production facilities.
The Korea Times noted that LG Electronics is likely to take a leaf from Apple’s playbook, retaining responsibility for design and R&D while Vingroup does the assembling as an original equipment manufacturing (OEM) company.
On Wednesday, LG Electronics CEO Kwon Bong-seok apparently emailed staff saying, “regardless of any change in the direction of the smartphone business operation, the employment will be maintained, so there is no need to worry.”
But despite the company’s best efforts to revive its smartphone unit, there’s no doubt that the situation is dire. According to The Korea Times, LG’s smartphone division has seen a deficit for 23 consecutive quarters going all the way back to the second quarter of 2015. Late last year, its accumulated operating deficit reached five trillion won (~RM18.3 billion).
(Source: The Korea Times)