LG ties up with China's Wingtech to step up ODM production

By Lim Chang-won Posted : August 3, 2017, 14:41 Updated : August 3, 2017, 14:41

[Courtesy of LG Electronics]


In an effort to diversify its smartphone portfolio and step up the production of budget phones, LG Electronics, South Korea's second largest smartphone producer, has selected China's Wingtech as an ODM (original design manufacturer) partner.

LG has promised to release more budget models equipped with high-end features. Industry sources said LG would partly transfer the design and production of low-end smartphones to Wingtech. ODM is a company that designs and manufactures a product as specified and eventually rebranded by another firm for sale.

The deal is designed to increase LG's overall production and reduce costs. It also reflects the popularity of LG's budget smartphones. The Chinese company has been involved in a series of ODM production for smartphone companies in China, India and other countries.

"Although LG is sluggish in its overall smartphone business, its low-end products are popular especially in the North American market," an industry source said. "It is expanding the production of low-end products through ODM because of pressure to cut costs in the smartphone business."

LG 's second-quarter net profit nearly doubled from a year earlier 514 billion won (458 million US dollars), helped by a steady rise in home appliance goods, but its mobile phone business has been in trouble due to poor sales of premium products, posting an operating loss of 132 billion won in the second quarter.

"For LG, which has a big difference from competitors in terms of recognition and marketing expenses, increasing its strength is the only way to overcome its smartphone crisis," the source said.

Along with expensive high-performance smartphones, LG and its competitors have released budget smartphones to capture the niche market, targeting consumers who look for affordable phones.

Last year, LG released a lineup of specialized budget phones: X POWER with large battery capacity, X Screen with a dual display and X CAM with a dual camera. In June this year, LG released X500, the successor of X POWER, one of the most loved models from the X lineup. "Q6", the cheaper brother of LG's latest flagship G6, was released this month as the first model for the company's new budget smartphone lineup "Q".



 
기사 이미지 확대 보기
닫기