LG Electronics sent 100 employees from home in South Korea, along with interpreters, to its smartphone factory in Vietnam to kickstart operations as soon as the local staff receives sufficient training, industry sources said on Nov. 18.
It would take around 6 months for the employees to be sent into the premium smartphone lines, indicating that LGE won’t feel the effect of its relocation to Vietnam – ultimately indicating bigger profitability from making smartphones at production costs –until at least first half of next year is over.
Struggling from lackluster smartphone sales, LGE has moved its high-end smartphone production lines from its local plant in Pyeongtaek of Gyeonggi Province to Vietnam’s Haiphong Campus. Its annual capacity has also gone up to 12 million units from the current 6 million. Previously, the company had produced mainly budget smartphones and those for consumption in Vietnam from the Haiphong Campus.
In Pyeongtaek, the company retains facilities capable of producing an annual 500,000 smartphones. LG said it would keep his plant on as the control tower for its global smartphone productions.
The move comes as LGE’s MC business responsible for producing smartphones recorded 18 consecutive quarters of losses up to the third quarter of this year when it managed to cut its operating losses by up to 50% to 161 billion won – mainly by slashing costs and not from driving up sales. Compared to the same period last year, losses actually rose by 10%. Sales also fell 25% on-year to 1.52 trillion won.
In 2020, LGE plans to produce 34 million units, with 12 million coming from Vietnam and another 500,000 in Korea. Via ODM firms in China, it will produce 20 million, and it is adding more such firms. Previously, it worked with Wingtech, Huaqin and Longcheer, but it added CNCE this year. CNCE produced the LG W30 Pro that was launched in India last month.
In Vietnam, LGE operates production facilities for smartphones, TVs and home appliances. LG affiliates such as LG Display and LG Chem also runs factories.
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