How are lg smartphones

The Hanoitimes – Vingroup is one of the most potential buyers for LG Electronics’ smartphone business.

South Korea’s LG Electronics reportedly intends to sell off its smartphone business to Vietnam’s conglomerate Vingroup, according to South Korea’s media.

LG Electronics intends to sell off smartphone business to Vingroup. Photo: Vingroup

The South Korean brand is considering all options for its loss-making mobile division that could include closing or selling off its business, according to Reuters in Seoul. The brand would be focusing resources on premium home appliance and automotive electronics.

Possible buyers are Vietnamese conglomerate Vingroup, Facebook, Volkswagen and Google, and Vingroup is one of the strong acquisition candidates, according to NewDaily.

Vingroup, with a market capitalization of US$16.5 billion as of the end of 2020, accounts for 14% of the total market capitalization of Vietnamese listed companies. The group is operating in diverse business areas, including hotels and tourism, real estate, distribution, construction, automobiles, and mobile phones.

VinSmart, Vingroup’s subsidiary, entered Vietnam’s smartphone market in 2018. It has been producing smartphones under an original design manufacturing (ODM) contract with LG Electronics. Although it hasn’t yet had a strong presence in the global smartphone market, in Vietnam, VinSmart’s smartphone outstripped Apple’s iPhone to reach the third place in terms of market share after Samsung and Oppo.

Newspim reported that LG Electronics’ sales network, research & development center, Brazil-based production plant attract VinSmart for its expansion. LG Electronics’ share in the North American smartphone market was 12.9% in 2020, according to Strategy Analytics.

Until now, Vingroup has no comment on this. However, the group also revealed it will export 5G-enabled smartphones to the US this year. Last September, its subsidiary VinSmart exported the first batch of smartphones to this market and planned to assemble nearly two million units for its partner in 2021.

Vingroup and LG have been negotiating since January

LG Electronics’ recent discussions to sell its mobile phone factories to Vingroup fell through as the Vietnamese conglomerate’s bid did not match the South Korean company’s expectation, according to information from Korea Times .

“LG had been negotiating with Vingroup to sell its smartphone-manufacturing facilities in Vietnam and Brazil, however, the discussions recently collapsed mostly due to different price expectations,” said an industry insider familiar with the matter.

Last month, the Asian media was in a huge stir over the rumoured take-over deal between Vingroup and LG Electronics, the fourth biggest “chaebol” in South Korea.

Accordingly, Vingroup has emerged as the most potential bidder to acquire LG Electronics’ smartphone production line as an important milestone for the Vietnamese group to penetrate the US.

LG reportedly aims to withdraw from the smartphone business due to difficulties, with intentions announced around a month after CEO Kwon Bong-seok said there would be a significant change in operations. The mobile communications business has witnessed losses of around $4.5 billion since 2015.

If the negotiation process is successful, Vingroup could take advantage of LG Electronics’ reputation, innovation, and sales network.

However, with the two sides unable to agree on a mutually acceptable valuation, LG will move on to find another buyer. Also, the company’s smartphone production lines in Vietnam and Brazil can be realigned to manufacture home appliances, noted an official from LG Electronics.

He also added there would be no more negotiations with Vingroup, and LG would seek a new buyer, according to Korea Times .

The Hanoitimes – A subsidiary of Vingroup has gradually materialized its goal of expanding business in the global market.

Three Vietnamese smartphone models produced by VinSmart, a subsidiary of the conglomerate Vingroup, has gone on sales at the wireless carrier AT&T’s retail systems in the US.

VinSmart’s smartphones are sold in Spain. Photo: Vingroup

The latest models, named Maestro Plus, Motivate and Fusion Z, are sold at prices ranging from US$39 to US$89 in the US market. According to VinSmart’s survey, American consumers are willing to pay for new-technology devices with diverse prices.

Last October, Vingroup signed a contract to produce two million smartphones for AT&T. Earlier, its subsidiary exported the first batch of smartphones to the US as part of the plan to export 5G-enabled smartphones to the market this year.

The Vietnamese company announced the establishment of a joint venture with automotive parts maker Magna International to manufacture electric motors last December. VinSmart planned to purchase South Korea’s LG Electronics’ smartphone business for its expansion as the tech company considered selling its manufacturing facilities in Vietnam and Brazil to expand its emerging sectors such as electric vehicle and vehicle component categories.

However, the deal  recently collapsed mostly due to the price difference, according to KoreaTimes. “With Vingroup offering a lower price than expected, LG will move on to find another buyer,” an official from LG was quoted as saying. “The company’s smartphone production lines overseas such as in Vietnam and Brazil can be realigned to manufacture home appliances.”

VinSmart was at the fifth position with a 11% market share in terms of smartphone sale in the last quarter of 2020 in Vietnam, according to the latest report of the smartphone market in Q4 by Canlays, a Singaporean market share company.

The Hanoitimes – The success of Samsung and Intel has led to other tech giants, such as Google and LG, shifting their supply chain to Vietnam.

Supply chain diversion has increased tech giants’ interests in Vietnam, a trend that may have been stalled but not stopped by Covid-19, according to HSBC’s report.

“Vietnam has emerged stronger from the pandemic, in part due to its bourgeoning electronics exports,” noted the bank, saying consistent FDI inflows in tech manufacturing helped Vietnam successfully transform into a key tech production base, gaining substantial market shares in phone and processor chip exports.

In 2020, electronics exports reached a record of US$96 billion, or 34% of its total exports. Yet, it was only less than US$1 billion in 2000, accounting for 5.5% of total exports.

Much of the tech success is thanks to Samsung’s multi-year FDI in Vietnam which started as early as late 2000s, turning Vietnam into its key production base. With investment over US$17 billion over the years, Samsung now has six plants in Vietnam, including two phone factories in the North, producing half of its smartphones and tablets.

“While China still dominates global phone exports, Vietnam has nonetheless increased its market share,” noted HSBC.

This is particularly evident in Vietnam’s January exports, growing 50.5% year-on-year. While this was in part due to Tết distortions, the primary driver of growth was booming smartphone exports (+115% year-on-year), given the recent release of Samsung’s flagship Galaxy S21.

Although Samsung had an earlier-than-usual release in 2021 (usually in March), the growth in smartphone was still strong after smoothing out the volatilities.

Meanwhile, Vietnam has also emerged as a rising supplier of processor/controller chips (though the ones assembled by Vietnam are relatively lower value chips used in a wide range of electronics products). While China produces 70% of computers globally, Vietnam’s rising production of finished computers has supported chip demand.

On the other hand, this is likely due to Intel’s US$1 billion investment in a chip assembly and testing facility in Vietnam since 2006. Just recently, Intel was reported to have injected another US$475 million from the final half of 2019 to manufacture its 5G products and core processors.

“The expansion may well explain why Vietnam’s processor exports tripled its share in 2019,” said HSBC.

The success of Samsung and Intel has led to other tech giants, such as Google and LG, shifting their supply chain to Vietnam. The trend intensified during the US-China trade tensions, which has benefited Vietnam not only in terms of booming trade, but also FDI diversion.

Even though the process was somewhat disrupted by the pandemic, increasing FDI interests have resumed as conditions improve, in particular with Apple-related production. Apple has been producing Airpods since May 2020, and is reported to start producing iPads as early as mid-2021.

Indeed, two Taiwanese Apple suppliers, Pegatron and Foxconn, both have announced huge investment plans to ramp up their production capacity in Vietnam. Also, two mainland Chinese Apple assemblers, Luxshare and Goertek, have increased recruitment and started to build a new production facility from late 2020, respectively.

Vietnam’s competitive FDI regime and sound macro fundamentals should continue to attract quality FDI, which is crucial in helping it move up the value chain. Its tech ambition is far from just being a low-end manufacturing hub, thus, more needs to be done to grasp the coming opportunities.

Challenges ahead

The first task is to improve labor productivity through better-quality education and vocational training. While labor availability to move to the more productive manufacturing sector is an opportunity, as over a third of its workforce still concentrates in agriculture, lack of productivity presents a challenge.

After all, a large proportion (33%) of workforce is still in “unskilled” occupation, as there remains a lack of qualified workers to advance to higher positions. Thus, measures like improving tertiary education and developing industry-specific training programs for technical workers are just some of the examples needed to better equip its human resources.

The other priority should be ongoing infrastructure push, stated HSBC.

Vietnam’s infrastructure spending has been consistently high, but its quality still lags behind other ASEAN economies, hindering its manufacturing potential.

As Public-Private Partnerships (PPP) is an ideal solution to balance Vietnam’s growing infrastructure needs and elevated public debt burdens, “it is indeed encouraging to see the authorities’ ongoing structural reforms in this direction,” stressed HSBC.

“The effective implementation of the revised PPP Law will be key to attracting private investors in these mega projects,” noted the bank.

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