Yesterday, reports of LG selling its smartphone business started doing the rounds. It was reported that LG CEO Kwon Bong-Seok on Wednesday sent out a message to staff. This message hinted that there would be a “major change” in the operation of the smartphone segment. LG is said to be considering all possible measures, including “sale, withdrawal, and downsizing of the smartphone business.” Now, a new report claims that LG Electronics wants to sell off its smartphone business to Vietnam’s Vingroup Co.
The latest development comes from Business Korea. It reports that Vingroup has put forward the most attractive offer among the companies that covet LG Electronics’ smartphone business.
For the unaware, Vingroup is a big conglomerate in Vietnam. It has a market capitalization of US$16.5 billion as of the end of 2020. Plus, it accounts for 14 percent of the total market capitalization of Vietnamese listed companies. The company has its hands dipped in diverse business areas, including hotels and tourism, real estate, distribution, construction, automobiles, and mobile phones. However, its presence is still small on the global stage.
Vingroup has been producing smartphones under an original design manufacturing (ODM) contract with LG Electronics since 2018. It is currently the third-largest smartphone producer in Vietnam after Samsung Electronics and OPPO. The company is reportedly interested in LG’s smartphone business in the United States as LG shares 12.9 percent smartphone market in North America as of 2020.
The report goes on to say that LG is contemplating selling off its smartphone business piece by piece as selling it in its entirety is practically difficult. Meanwhile, LG has reportedly stopped the production of LCD panels at one of its key assembly lines back in the third quarter of 2020 because of low profitability. It is tipped that LG will now focus its efforts on producing larger panels for automobiles instead of smartphones.