‘Made in Korea’ at an end for LG smartphones

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‘Made in Korea’ at an end for LG smartphones

LG Electronics will no longer produce mobile phones in Korea.

The electronics company said Thursday that it will relocate its domestic smartphone production to Vietnam to cut costs and help its faltering mobile business, confirming earlier news reports speculating the company would be abandoning handset manufacturing in its home market.

As for the roughly 750 employees who have been working on the production line in Pyeongtaek, Gyeonggi, LG said it plans to move them to its home appliance factory in Changwon, South Gyeongsang.

It will not be laying them off.

“It is our strategy to raise the competency and profitability of our mobile business at a time when the global smartphone market is showing slow growth,” LG said in statement. “Also, with the recent popularity of home appliances, like air purifiers and dryers, we thought we should respond quickly to meet growing demand.”

The electronics company has been producing smartphones in four countries: Korea, Vietnam, Brazil and China. The Korean facility manufactured premium smartphones, while the Vietnam facility focused more on mid-to-low-priced phones.

Under LG’s relocation plan, the company’s Vietnam facility in Hai Phong - on the coast about 85 kilometers (53 miles) from Hanoi - will produce a full lineup of smartphones, with the capability to manufacture 11 million a year. While the Vietnam facility currently has the capacity to produce six million phones a year, volumes will increase as production is moved from the Pyeongtaek production line in the second half of 2019, according to LG.

After the relocation, the Pyeongtaek facility will no longer produce smartphones. It will be the management hub for global phone production. The facility will also be used to test whether newly developed phones are ready for mass production.

LG’s decision follows 15 consecutive quarters of losses in its mobile businesses. Accumulated losses total roughly 3 trillion won ($2.59 billion).

The future of LG’s mobile business is not very bright. Recently, it delayed the introduction of its first 5G phone, the LG V50 ThinQ. The original roll out was scheduled for April 19, and no revised date was announced. While Samsung Electronics introduced a foldable phone, LG stuck with a dual-display design.

As LG’s mobile communications division lost money, the company cut head count in that division. Total employee numbers have declined from 8,000 in 2013 to about 4,000 last year.

The 750 employees to be moved from Pyeongtaek to the Changwon factory will be trained to produce home appliances.

LG said it will help employees adapt to their new work environment and offer special loans. It will also cover some relocation expenses.

Details of the support will be negotiated with the labor union.

BY KIM JEE-HEE [kim.jeehee@joongang.co.kr]
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