LG's struggling smartphone business is being overhauled to help the company remain competitive. As reported by Reuters, the South Korean company has announced a shake-up of the smartphone division, with the goal being to rely more heavily on outsourcing for its low-end and mid-range models.
According to the report, LG has created a new title inside the company for original device manufacturer (ODM), which is a term used to describe companies that simply put their brand on products designed and manufactured by a different company. The goal is to cut development costs and remain competitive, as competition in the more affordable segments of the smartphone market grows fiercer. LG has had some trouble adjusting to the market in the past few years, and the mobile division has consistently turned a loss for the company for the past 22 financial quarters.
We started to see some changes to the company's business model in 2020, with most of its phones no longer using the top-tier processor from Qualcomm. Instead, the company's premium offerings have focused on design, such as with LG Velvet, or unique form factors, like the LG Wing. LG plans to continue investing in this area, with some internal positions moved around to refocus on premium smartphone development, and some recent rumors point to a potential phone with a rollable display.
So far, LG has already been relying on outsourcing for its low-end smartphones, but the mid-range is the more competitive segment, so it makes sense to renew efforts on that front. Of course, it remains to be seen how well that turns out for the company.
Source: Reuters
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