LG is planning to outsource more of its low-end and mid-range smartphones, according to a report from Reuters. The change would increase design and manufacturing for more lower-end LG phones to third-party ODMs, while keeping LG's branding. The change is likely meant to reduce costs and increase long-term sustainability as LG's mobile efforts continue to fail.
For those keeping track at home, LG's mobile division has been operating at a continuous loss for years, subsidized by the company's many other efforts as its phones fail to succeed. Earlier this year, the company reportedly discontinued its G series of phones, and back in 2018, it gave up on its prior yearly release cadence — phones from the company now land "when it is needed." Long-standing customer complaints have included a slow pace of updates, which the company tried to address back in 2018 with a new "Software Upgrade Center." However, that hasn't made much of an impact until the LG V60 ThinQ, according to our Android Police update tracker.
The change, announced today, is part of a larger restructuring for the company, which is now focusing its original hardware R&D efforts on premium smartphones, as more lower-priced models are pushed to ODMs (read: third-party manufacturers). Lower-end LG phones have had third-party manufacturers for some time, but last October, the company started bringing the practice up into its mid-range devices, a move which it furthers today.
The world of Android phones is increasingly dominated by Samsung and Huawei, though the latter's influence is waning, likely a result of the ongoing drama here in the US. Following the sale of its Honor brand, Huawei's market share could be further reduced in the coming months. In the meantime, it just barely edges out Samsung according to the IDC, and LG doesn't even make the top 5 globally. In the US, it's another story, as the company sits in third place after Apple and Samsung (according to Counterpoint), but even operating continuously at a loss, it has less than half the market share of Samsung as of last quarter.
Techsponential's Avi Greengart tells us the move may help focus resources, but it may ultimately have a negative impact. "Moving the entry level phones to an ODM model is unlikely to make them more competitive and will make LG-specific brand differentiation much harder to achieve."
LG isn't the only Android vendor that's been suffering in recent years, either. Sony spent last year restructuring to compensate for its ongoing mobile losses, hitting a record low earlier this year, though it might finally turn a profit someday soon.
Today's news doesn't spell doom for LG just yet, but it's another part of the ongoing trend indicating trouble at the company. For the sake of market competition, I hope it's a plan that works.