LG scraps core teams in its mobile business 

LG Electronics has scrapped many of its core teams within its mobile business, TheElec has learned.

The company also formed a new team overseeing the original design manufacturer (ODM) operation.

LG’s mobile business is called Mobile Communication (MC) Company by the firm. Teams that have been scrapped are; MC Advanced Research and MC Quality Engineering (QE) teams under MC Research Lab; MC Advanced Sales team under the Global Sales Group; and the production team.

The leaders of these teams were also transferred to different teams. Noticeably, senior vice president Lee Hyun-jun of MC Advanced Research was moved to MC Google Collaboration Task team. Vice president Oh Sung-hoon, who previously headed MC QE, was made head of product development team. 

In effect, LG has scrapped its development, sales, production and quality teams for its smartphones. 

The newly formed ODM team likely means LG will put more weight on contract production for its smartphones going forward, instead of developing its own. The new ODM team is headed by manager Kim Jing-woong.

LG have been using more and more ODMs for its smartphone production. In 2018, phones made by ODMs accounted for 10% of the company’s total smartphones. This has increased to 30% in 2019; this year it is expected to be 60%.

In 2021, around 70% of LG smartphones are expected to be produced by ODMs.

ODM companies design and manufacturer products for their customers. These products are then sold with the customer’s label on them.

LG is hoping the use of ODM will save costs.

The company has marked 22 straight quarters of loss as of the third quarter of 2020.

LG recently launched the dual screened LG Wing, but in South Korea the phone is selling poorly. People familiar with the matter said local carrier LG Uplus has increased subsidies on the phone to lure customers. Sales of LG Velvet, launched in May, was also disastrous, they said.