Changed the direction of the LG smartphone sale to’the time of military fire’… Google Vietnam Bean Group

Input 2021.01.31 06:00

CEO Bong-Seok Kwon formalizes sale and seeks candidates
Google Card Manjijak, Bean Group, Volkswagen Participation
Emphasizing job security but… 3700 employees initiated



LG Twin Tower in Yeouido, Seoul. /yunhap news

“It is still difficult to specify the timing and direction of decision-making, but we are looking for an optimal solution considering the synergy with the company.”

This is a statement from an LG Electronics official at a conference call following the announcement of 4Q results on the 29th after LG Electronics CEO Kwon Bong-seok officially announced the possibility of selling its smartphone (MC) division. LG Electronics does not disclose detailed information, but if you summarize the opinions of the industry, it is known that LG Electronics is weighing the sale under contract terms with a group called’Samsung in Vietnam’ and Google of the United States.

LG Electronics’ position is that the stability of employees’ employment is the top priority, but there are also voices of concern internally as to whether hiring succession will be successful if foreign companies take over the business unit. Currently, it is reported that there are 3700 employees of LG Electronics’ smartphone (MC) business division. With a large number of employees already assigned to other departments, it is predicted that the remaining employees will be switched to future food business such as electronic equipment business (VS business headquarters) or robots, and some hopeful retirement will be inevitable.

An employee of LG Electronics who knows the situation of the MC business division said, “As jobs can be blown away in the morning, employees are not working properly.”

◇’Google’ for IP vs’Bin Smart’ to give more money

Currently, it is known that the companies that have revealed their intention to acquire LG Electronics are Vinsmart, a smartphone affiliate of Vingroup, Google in the US, and Volkswagen in Germany. It is reported that Beansmart, which announced its intention to take over first, offered the highest acquisition price, but did not require intellectual property rights (IP).

According to counterpoint research, a market research firm, LG Electronics is targeting the low-cost smartphone market for less than $150 (approximately 170,000 won) in North America (64% of the total). It can be inferred that Bean Smart, which is working hard in the North American market, is coveting LG Electronics’ North American market brand power and sales network.



Graphic = Kim Ran-hee

In the case of Google, it is known that it requested an IP while offering less money than Bean Smart. An industry official said, “It is interpreted that the reason LG Electronics is not able to easily decide to sell it to Bean Smart, which does not require a lot of money and does not require IP, is because it has in mind the synergy with Google’s autonomous driving subsidiary Waymo in the future.” .

Recently, LG Electronics joined forces with Magna, the world’s third-largest automobile comprehensive parts company, to establish a joint venture for electric vehicle powertrain called’LG Magna’. When the era of self-driving cars comes, it aims for the’TSMC (the foundry industry’s No. 1 company)’ model that produces vehicles instead. If Google presented the terms of the contract so that LG Magna can produce Google Waymo in the future, it is evaluated that the contract can be concluded as much as possible.

In the case of Volkswagen, which belatedly jumped into the takeover, the industry reports that it will be able to actively cooperate with LG Electronics in the interior space of the vehicle when the era of autonomous driving in the future comes. In other words, LG has no choice but to think about whether it will get a lot of money by selling its business unit right away, or whether it will seek business opportunities in the future and generate cash, if not right now. For this reason, the industry is seeing that the possibility of acquiring Google is the greatest.

◇ Why did LG Electronics officially sell it?

Some say that LG Electronics is having a hard time finding a company to buy a business unit. This is why LG Electronics officially officially sold its business units, which are usually conducted under water.

An official familiar with the M&A industry said, “If there are many competitors who are willing to buy targets for sale, the more the participants participate, the higher the ransom, so it is common to proceed quietly. It is an urgent situation to find it, so it is good to make a rumor.” It is a similar context that the process of selling Huawei, a Chinese smartphone company, which has recently been subjected to US sanctions and is in a survival phase, is repeatedly exposed to the media.

Recently, it is analyzed that it was to raise the ransom for sale by introducing a rollable (screen rolling) phone on a large scale at the world’s largest information technology (IT) and home appliance exhibition’CES 2021′.

According to Counterpoint Research, LG Electronics sold 24.7 million smartphones last year, recording only 1.9% of the global smartphone market share. It recorded a deficit for 23 consecutive quarters until the fourth quarter of last year, and the cumulative deficit has also increased to 5 trillion won.

An industry insider said, “LG ​​Electronics is introducing experimental smartphones such as the G5 (2016), which can replace some of the smartphone parts, and the dual-screen phone wing (2020), where the main screen is rotated horizontally. “Therefore, the proportion of flagship (high specification) smartphone sales decreased, which deteriorated profitability, and this led to a vicious cycle leading to a decrease in investment and development costs for new products,” he said.

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