LG Electronics will shut down its South Korean smartphone production plant and shift its manufacturing base to Vietnam. The move will encourage the company to join its rivals who have established manufacturing plants in Vietnam perceived to be a low-cost location due to the global tech slump.
The company in a statement said Vietnam provides ‘abundant labour force’ and 750 workers at its South Korean handset factory will be relocated to its home appliance plant.
John Park, an analyst at Daishin Securities found the decision positive. However, the company’s smartphone presence in the global market is not very obvious, although they have a ‘solid presence’ in the US. “It’s too early for them to close the whole business when fifth generation (5G) networks are starting,” Park said.
Last year, the company ranked third in the US smartphone market, leading to a 17 percent per share as of the third quarter, according to data from Counterpoint Research.
LG’s decision to shift its manufacturing base comes right after its rival Samsung’s announcement to cease operations at one of its smartphone plants in China. Likewise, Japanese multinational Sony is also planning to shut down smartphone plants in Beijing, with a focus redirected toward its handset business.
Shares in LG jumped three percent. Vietnam is not the only place to have an LG smartphone plant, the company also manufactures smartphones in China, India, and Brazil.