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LG will outsource production of budget devices to save its phone business

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LG VelvetSource: Alex Dobie / Android Central

What you need to know

  • LG is moving the manufacture of its low and midrange phone to Chinese ODMS.
  • It's doing so to save costs as the company moves towards focusing on its high-end products.
  • The company has seen 22 consecutive quarters of loss in its mobile business.

LG is reorganizing its mobile phone division in a bid to cut costs and tackle competition from firms like Oppo and Xiaomi, as per a Reuters report on Monday.

Going forward, LG will outsource the production of its budget phones to Chinese ODMs. Similar to decisions made by Samsung, it'll be using Chinese ODMs to build those phones and sell them under its own brand. The company will instead focus its resources on building out a compelling high-end range.

LG has found some critical success with new phones in the form of the LG Velvet and the LG Wing, but the company has yet to pick up the sort of sales numbers it needs to be relevant. Xiaomi, on the other hand, has leapfrogged Apple to become the third-largest smartphone OEM sales-wise.

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As Reuters notes, LG's problem remains an issue of marketing. Even if the company manages to effectively lower costs and prices to the point where it can compete with the likes of Vivo and Oppo on those terms, it still won't be able to beat them due to the mindshare they already occupy.

LG will likely need more innovative phones like the LG Wing in the future. It'll probably be priced out of reach for the majority of people in LG's target markets, but those flagships be able to drive interest to whatever lower end phones LG would be making then. If the company manages to put together a competent lineup, it could prove to be a winning strategy.

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LG Velvet

The LG Velvet was a revamp of LG's mobile line as the company moved away from the G-series. It's thoughtfully designed when it comes to hardware and software both. It still has its flaws, but the price makes those easy to overlook.

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