SEOUL (Reuters) - LG Electronics Inc said on Thursday it would stop producing smartphones in South Korea and move manufacturing to Vietnam, joining global rivals in reorganising production as they battle a slump in global demand.
The restructuring of its money-losing business comes as LG, once one of the world’s top three mobile phone makers, has seen its global market share spiralling to less than 3 percent in the decade that smartphones came to dominate the mobile market.
“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 (5G) networks are starting,” Park said.
LG is ranked third in the U.S. smartphone market, with a 17 percent share as of the third quarter of 2018, showed data from market researcher Counterpoint, after Apple Inc and Samsung Electronics Co Ltd.
LG, whose smartphone business has been losing money for several years, 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.
It said Vietnam provides an “abundant labour force”, and that 750 workers at its South Korean handset factory would be relocated to its home appliance plant.
LG also makes smartphones in China, Brazil and India.
The shift comes after Samsung, the world’s biggest smartphone maker, said late last year 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.
Shares in LG Electronics gained 3 percent, versus a 0.2 percent decline in the broader market as of 0224 GMT.
Reporting by Ju-min Park; Additional reporting by Heekyong Yang; Editing by Christopher Cushing