S. Korean production in global smartphone market has decreased rapidly in past 10 years
LG Electronics decided to reduce smartphone production volumes at its factory in Pyeongtaek, Gyeonggi Province, as of this June and halt operations within the year. The volumes are to be produced instead at its factory in the northern Vietnamese city of Haiphong.
The aim of the factory relocation is to increase profitability. As of the fourth quarter of last year, the LG Electronics smartphone sector had recorded losses for 15 straight quarters, with cumulative losses amounting to 3 trillion won (US$2.59 billion). LG Electronics is currently producing smartphones at a total of six locations, including India, Brazil, and China (two factories) along with Pyeongtaek and Vietnam. Shin Da-eun reports on hani.co.kr
With around 1,400 workers, the Pyeongtaek factory is a global production base control tower that mainly produces premium phones, accounting for roughly 15% of all LG Electronics smartphones. The production line is to be relocated to Vietnam while the control tower remains in place, sources said. Haiphong is currently home to a number of factories for major LG affiliates.
LG Electronics plans to reassign its domestic smartphone production workers to other appliance production sites in South Korean cities like Changwon. The strategy is aimed at increasing efficiently by reassigning the workers to new appliances with strong demand, including air purifiers, driers, and clothing care appliances. The company has taken steps to pare down by reassigning workers from its MC project headquarters (smartphone sector) to other divisions. The MC project headquarters is not planning to hire any new employees for the first half of this year.
According to figures from the market research firm Strategy Analytics (SA), South Korean production decreased from 11.4% of the world smartphone market in 2008 to 1.3% in 2018. As of last year, China accounted for 70% of production, followed by India and Vietnam at 13% and 10%, respectively.
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