LG to Outsource Production of Budget Smartphones to Save Business

LG is one of the leading consumer electronics brand globally. As innovative and diverse LG is with its range of offerings, the company somehow couldn’t keep up with the smartphone trends. Now, in its latest move to save its caving smartphone business, the company has decided to outsource the production of its lower and mid-range offerings

In a major overhaul, LG has decided to increase outsourcing of design of its low-range and mid-range smartphones. Although it may seem a bit surprising to users, it is a general practice observed by some of the growing smartphone brands. Several brands that have expanded outside of China in the past few years have kept their manufacturing outsourced. 

In a statement given to Reuters, LG’s spokesperson revealed that LG had reshuffled resources. The company has done it as a part of a plan to “focus its in-house R&D and production on premium smartphones.” To get its plan into action, the company has put an end to some R&D positions and moved some around. 

As a result of this reshuffling of resources, LG’s premium and flagship offerings will be designed and manufactured in-house. In contrast, the rest of the lineup, including low-end and mid-range smartphones, shall be designed and manufactured outside of LG by third-party designers and manufacturers. Of course, the company will retain its branding on outsourced devices and keep an eye on quality and standards.

LG Embracing Outsourcing: Why it Makes Sense

Well, this does not seem like a deal-breaker to us. We think that LG might have a chance to bring in better innovation and design to its low-end and mid-range smartphones by giving them to third-party designers. We like the chances of seeing something better and improved coming out of outsourced resources than what LG had been offering for several years. 

Also, from a marketing point of view, this move seems to make a lot of sense. Basing our judgment on LG’s earnings reports, the mobile division has reported operating losses for 22 consecutive quarters. And LG has been running with those losses for over five and a half years. It only looks like a sane move to embrace outsourcing for two segments of the division. 

What are your thoughts on LG finally taking up outsourcing for some of its smartphone offerings? Do you think that something good may come out of it? Please share your opinions with us in the comment below.