LG Electronics shuts South Korea production to move to Vietnam
LG Electronics Inc will stop producing smartphones in South Korea and move manufacturing to Vietnam, joining global rivals in reorganizing production as they battle a slump in global demand.
The restructuring of its 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 percent in the decade.
“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 networks are starting,” Park said.
LG Electronics is ranked third in the U.S. smartphone market. Market researcher Counterpoint showed that LG obtained 17% of the market share in 2018, after Apple Inc and Samsung Electronics Co Ltd.
Its smartphone business has been losing money for several year. It said in a statement that shifting production will boost annual capacity of its smartphone plant in Vietnam by 83 percent to 11 million handsets from the second half of 2019.
LG says Vietnam provides an “abundant labor force”. It will relocate the 750 workers at its South Korean handset factory to its home appliance plant.
LG Electronics also makes smartphones in China, Brazil and India.
The shift comes after Samsung. Last year, it said 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.