Enter 2021.01.19 06:00
Expansion of outsourcing production by establishing a new ODM business manager
The abolition of core departments speeds up staff relocation
I deny it, but discuss the possibility of sale or abolition
LG Electronics said, “It is true that the business is difficult, but the sale of the business unit is unfounded.” Recently, at the world’s largest information technology (IT) and home appliance exhibition’CES 2021′, they even unveiled a rollable (screen curled) phone that will be released this year, and received a good response, but there are also reactions that it will be possible to sell the smartphone business.
Still,’Koo Kwang-mo (Photo) There is a continuing speculation that LG Group, which is rapidly restructuring its business in the wake of the 4th year of the LG Chairman’s regime, may be able to close the smartphone business. In particular, the automobile parts solution (VS) business division, which held a grip on performance with LG Electronics’ smartphones, is making rapid progress, such as establishing a joint venture’LG Magna’ with Magna, the world’s third largest automobile parts maker. It is speculated that the time to make a decision about
That’s why there are rumors that LG Electronics can sell the business at any time by paying a ransom with a rollable phone. The future of LG Electronics’ smartphone business was analyzed by scenario based on opinions of experts and industry officials.
◇ Significant reduction in smartphone business is the first
According to industry opinions on the 19th, it is reported that LG Electronics is undergoing reorganization in the direction of drastically reducing the MC division’s R&R (role and responsibility). Except for high-end (high-end) smartphones such as rollable phones, production can be maximized through the manufacturer’s development production (ODM), and the remaining related personnel can be relocated to other departments instead. In this process, the industry believes that the sale came out.
In fact, LG Electronics is reorganizing its business structure, focusing on outsourcing production, which can improve the cost structure, such as removing some of the core departments within the MC business division and establishing a new ODM business manager through the recent reorganization. Accordingly, it is predicted that LG Electronics’ ODM share, which was about 30% in 2019, will more than double to 70% this year.
An industry insider said, “The artificial intelligence (AI) dedicated organization launched by LG Group recently announced its policy to cultivate over 1,000 AI experts in the group for 3 years. There may be movement,” he predicted. Currently, there are less than 4,000 employees in the MC division.
◇ A clue to the sale of rollable phones that stopped being released for 5 seconds?
An official in the parts industry said that LG Electronics has confirmed that it is considering the sale of the smartphone business through the rollable phone video shown at CES. He said, “If LG Electronics had a plan to release a rollerball phone even in the second half of this year, it would have introduced the product in detail rather than just showing it shortly,” he said. “It’s like we advertised that’we have such a technology’. It will help to some extent when selling to a company.”
At the CES press conference held on the 11th (local time), LG Electronics released a short video of the rollable phone automatically unfolding and folding. No detailed specifications were disclosed. The details of the rollable phone were not disclosed in the introduction material.
In the industry, it is believed that the possibility of selling a large number of rollable phones is not high due to the fact that smartphone growth is stagnating, that rollable phones are not mainstream smartphones, and that they are less verified than Samsung Electronics foldables (phones that fold the screen). .
Excluding even the expected rollable phones, the LG smartphone business environment is not more comfortable. Cho Cheol-hee, a researcher at Korea Investment & Securities, said, “The MC division is estimated to have an operating deficit exceeding 200 billion won due to sluggish smartphone shipments in the fourth quarter of last year.” Vivo and Xiaomi are aggressively procuring related parts, so they are having difficulty securing core parts.” The industry reports that the rollable phone, which is being developed in partnership with China’s BOE, is also being pushed out of priority due to its major customer, Apple. This is because LG Electronics’ target volume for mass production of rollable phones is about 300,000 units.
LG Electronics has completely relocated its Korean production plant overseas and has preemptively completed the realignment of production-related manpower. Currently, its assets include smartphone factories in China, Brazil, and India, mainly in Vietnam, human resources at headquarters, and intellectual property rights (IP). The industry view is that there is no room for selling this to overseas smartphone makers such as China. There is also a story that LG Electronics broke down last year after negotiating to sell its smartphone business with Vivo, a Chinese smartphone maker.
◇ If it is difficult to sell, it is possible to operate as a’mini department’ after the abolition of the MC division
Because it is difficult to receive recognition of the asset value, some analysts say that rather than selling the smartphone business, the MC division could be abolished and operated as a mini division within other divisions. For example, it can be included as a division within the VS division.
Park Kang-ho, a researcher at Daishin Securities, said, “As a small department, you can choose a card that only releases one or two flagship smartphones a year like Sony in Japan.” “As smart phone technology is also linked to automobiles and mobility, we show technological leadership. It is predicted that by reducing marketing and development costs, I will be able to resolve the deficit and invest in other businesses by over 200 billion won per quarter.”
LG Electronics is trying various future businesses, such as putting up a virtual human,’Kim Rae-ah’, implemented with AI through CES, on the stage of a keynote speech.