LG Electronics to Expand Smartphone ODM Division
New ODM Department Established Under MC Business Division
Research, Marketing, and Sales Teams Consolidated
[Asia Economy Reporter Han Jinju] LG Electronics' smartphone division, the MC Business Division, is expanding its ODM organization and consolidating its research and sales teams.
According to industry sources on the 9th, LG Electronics has carried out an organizational restructuring to strengthen its ODM organization by upgrading the existing BTD Business Office to be in charge of ODM. It is expected that ODM personnel will also be increased.
The existing advanced research and marketing teams will be transferred to the research institute, and some sales teams will be consolidated. The MC Advanced Research Team and MC QE (Quality Management) under the MC Research Institute will become part of the research institute, while the MC Advanced Sales Team and SCM under the MC Overseas Sales Group will move under the Overseas Sales Group.
LG Electronics explained, "We established an ODM business organization and merged organizations performing similar roles."
As LG Electronics increases the proportion of smartphone ODM, the influence of the dedicated ODM organization has grown. ODM refers to a method where design and component procurement are entrusted to manufacturers, and products are produced with the orderer's brand label. LG Electronics began increasing its ODM ratio in 2018 and expanded it to about 50% this year. Currently, except for flagship smartphones, mid- to low-end smartphones are produced through ODM.
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LG Electronics is seeking a breakthrough for its smartphone business losses through ODM. This is a strategy to reduce production costs. The industry estimates LG Electronics' losses this year to be around 720 billion KRW, and expects it to decrease to the 320 billion KRW range next year. LG Electronics plans to release the flagship smartphone "LG Rainbow (tentative name)" in the first quarter of next year and the rollable smartphone "LG Rollable (tentative name)" in the first half of the year.
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