LG put its mobile phone business up for sale to concentrate on other areas such as electric vehicle (EV) components.
LG had been negotiating with Vingroup to sell its smartphone-manufacturing facilities in Vietnam and Brazil.
Vingroup has fallen through as the Vietnamese conglomerate’s offer was lower than that wanted by the Korean tech company.
Visit Vietnam Insider’s homepage for more stories.
LG Electronics’ recent attempt to sell its mobile phone factories to Vingroup has fallen through as the Vietnamese conglomerate’s offer was lower than that wanted by the Korean tech company, a high-ranking industry official familiar with the matter said Monday.
“LG had been negotiating with Vingroup to sell its smartphone-manufacturing facilities in Vietnam and Brazil, however, the discussions recently collapsed mostly due to the price difference,” the official said.
Due to mounting deficits in recent years, LG put its mobile phone business up for sale to concentrate on other areas such as electric vehicle (EV) components. Following the LG announcement, Vingroup was mentioned as the “right bidder” in possibly striking a deal, as the largest listed firm in Vietnam has been seeking to expand into high-tech industries.
The official said there would be no more negotiations with Vingroup, and LG would seek a new buyer.
“With Vingroup offering a lower price than expected, LG will move on to find another buyer. Also, the company’s smartphone production lines overseas such as in Vietnam and Brazil can be realigned to manufacture home appliances,” he added.
However, LG Electronics has not abandoned its plan to sell off the plants while keeping hold of its intellectual property in mobile technology and product design. To minimize the impact caused by organizational restructuring, employees working for its smartphone unit will be reallocated to other departments, the official noted.
With regard to the issue, an LG Electronics representative reiterated that the company “is leaving all possibilities open for the mobile business.”
LG Electronics began signaling its intention to withdraw from the mobile phone business a month ago after CEO Kwon Bong-seok said there would be a significant change in operations. The company also reportedly scrapped its plan to release a “rollable” smartphone, which the company introduced at the latest Consumer Electronics Show in January.
A local media outlet reported that LG had apparently told its parts suppliers ― including Chinese display maker BOE ― to put the development of the rollable smartphone project on hold. The company originally planned to attract consumers’ attention with the rollable phone that can go from a smartphone to small-sized tablet within seconds.
Regarding this device, the representative added “there’s nothing to comment about on the issue.”
LG Electronics has made repeated efforts to revive the money-losing business by reorganizing its product lineups, rapidly increasing outsourcing, and releasing smartphones with different form factors.
Nevertheless, the mobile communications business has suffered operating losses for 24 consecutive quarters since 2015, amounting to an aggregate 5 trillion won ($4.5 billion).
While the company has been struggling with its smartphone business, LG has been gradually expanding its presence in emerging sectors such as EV and vehicle component categories. Last December, the company announced the establishment of a joint venture with automotive parts maker Magna International to manufacture electric motors.
By Korea Times.