LG Electronics confirmed Thursday that it would stop producing smartphones in South Korea and move manufacturing plants to Vietnam in an effort to improve profitability amid a slump in global smartphone demand.
The smartphone maker has decided to transfer its phone manufacturing plants in Pyeongtaek, Gyeonggi Province, to Haipong in Vietnam. Those working at its Pyeongtaek factories will be posted to Changwon, South Gyeongsang Province.
With the transfer expected to be completed by the end of this year, LG Electronics said the restructuring of its smartphone manufacturing came as part of efforts to improve profitability of the money-losing business.
LG Electronics` Haipong campus
“Not only do we want to improve profitability amid a global slump in the smartphone business, we aim to make our business more efficient as demand grows for new home appliance equipment,” LG Electronics said in a statement.
The announcement came a day after a report that LG Electronics would reorganize its smartphone business by transferring manufacturing in Korea to Vietnam. The Southeast Asian country can boost profitability for the company with cheap labor and geographic benefits, the company said.
Since the second quarter of 2015, LG Electronics’ smartphone business has posted deficits for 15 consecutive quarters. The company has also seen its global market share fall to less than 3 percent.
Given the challenges, the conglomerate has scaled back the size of its smartphone business department over the past years. The company has also reportedly decided not to hire new employees for the mobile business department.