The company is undertaking an overhaul of a troubled mobile phone sector to help it remain competitive.
Analysts pointed out that LG’s new move represents an attempt to cut costs and compete with Chinese competitors, as the company has faced some difficulties in adapting to the market in the past few years.
LG said: The mobile phone sector, which has reported an operating loss of 22 consecutive quarters, has decided to cooperate with outside sources more to design and manufacture smartphones, with LG’s trademark on the product.
LG aims to reduce development costs and remain competitive, as competition intensifies in the more affordable sectors of the smartphone market.
The company has also canceled some research and production positions and redistributed some other positions, as part of an effort to focus in-house R&D and production on premium smartphones, with low and medium devices produced by outside sources.
The company ranked third in the global smartphone market in the first quarter of 2013, according to market research firm Strategy Analytics data.
While it was out of Counterpoint’s market research firm’s ranking of the top seven companies in the third quarter of this year After losing its position to Chinese manufacturers, such as Huawei, Xiaomi, Vivo and Oppo.
“It knows that it is competing with Chinese competitors, not Apple or Samsung,” said (Tom Kang) Tom Kang, analyst at market research firm Counterpoint.
He added: LG is trying to reduce the price of its models by cooperating with external manufacturers that Chinese companies use, but it cannot win against Chinese companies without the ability to market, even if it uses external sources to manufacture its products.
In October of last year, LG said that it is expanding its cooperation with external sources to include its range of mid-range smartphones, which is the most competitive sector, after the cooperation included only low-end smartphones.
And features of change began to appear in the company’s business model in 2020, as most of its flagship phones no longer use flagship processors from Qualcomm, and the company focused instead on designs, such as the LG Velvet, or the shape, like the LG Wing.