LG Electronics to shut South Korea phone plant, move production to Vietnam

    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 spiralling to less than 3% in the decade that smartphones came to dominate the mobile market.
    By: REUTERS
    | Updated on: May 06 2020, 11:25 AM IST
    A show attendee passes by the LG Electronics booth during the 2009 International Consumer Electronics Show (CES) in Las Vegas, Nevada, January 9, 2009. REUTERS/Steve Marcus/Files
    A show attendee passes by the LG Electronics booth during the 2009 International Consumer Electronics Show (CES) in Las Vegas, Nevada, January 9, 2009. REUTERS/Steve Marcus/Files
    A show attendee passes by the LG Electronics booth during the 2009 International Consumer Electronics Show (CES) in Las Vegas, Nevada, January 9, 2009. REUTERS/Steve Marcus/Files
    A show attendee passes by the LG Electronics booth during the 2009 International Consumer Electronics Show (CES) in Las Vegas, Nevada, January 9, 2009. REUTERS/Steve Marcus/Files

    LG Electronics Inc said on Thursday it would stop producing smartphones in South Korea and move manufacturing to Vietnam, joining global rivals in reorganising production as they battle a slump in global demand.

    Also read: Looking for a smartphone? To check mobile finder click here.

    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 spiralling to less than 3% in the decade that smartphones came to dominate the mobile market.

    "I find its decision positive," said analyst John Park at Daishin Securities.

    "Their existence may be barely noticeable in the global smartphone market, but they have solid presence in the U.S. market. It's too early for them to close the whole business when fifth generation (5G) networks are starting," Park said.

    LG is ranked third in the U.S. smartphone market, with a 17% share as of the third quarter of 2018, showed data from market researcher Counterpoint, 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 labour force", and that 750 workers at its South Korean handset factory would be relocated to its home appliance plant.

    LG also makes smartphones in China, Brazil and India. 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.

    Japan's Sony Corp is also closing its Beijing smartphone plant as it works to make its money-losing handset business profitable.

    Shares in LG Electronics gained 3 percent, versus a 0.2 percent decline in the broader market as of 0224 GMT.

     

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    First Published Date: 25 Apr, 01:38 PM IST
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