LG aims to turnaround in mobile unit

LG Electronics CEO Kwon Bong-seok speaks during a press conference at the Consumer Electronics Show in Las Vegas, Thursday (KST). / Courtesy of LG Electronics

By Baek Byung-yeul

LAS VEGAS ― A senior LG Electronics executive said Thursday (KST) that the company's long-time money-losing smartphone division will turn a profit by the end of 2021; however, he didn't elaborate how.

"LG Electronics mobile business is going to be profitable by 2021. I can say we can make that happen as LG Electronics will expand our mobile lineup and steadily release new ones attached with some wow factors to woo consumers," the company's chief executive Kwon Bong-seok told reporters in a press conference on the sidelines of this year's technology exhibition, here.

Regarding the specifics on how, the CEO didn't delve into more but only reiterated LG Electronics' plan to expand the phone lineup, which he believes is possibly a plus factor to improve LG's competitiveness in the already saturated smartphone market.

LG Electronics, a long-time bitter rival of Samsung Electronics on its home turf, recently said it was expecting to generate 98.6 billion won in operating profit for the fourth quarter ending Dec. 31, last year. This was far below earlier market consensus as analysts had expected LG to report some 270 billion won operating profit for the fourth quarter of 2019.

At the conference, the LG executive didn't pay much attention in his assessment to the company's disappointing performance in the latest quarter, though analysts have no doubts that the disappointment was mostly due to the continued sagging performance of its mobile unit.

As cost-cutting efforts and a bid to improve profitability, LG decided to relocate its smartphone production line from its key South Korean plant in Pyeongtaek, south of Seoul, to Haiphong in Vietnam in 2019.

The senior executive also remained quite upbeat on the outlook of its ambitious automotive component part business as he was expecting to see the division's turnaround also in 2021. LG Electronics is a 1.5-tier supplier in automotive parts used in making dashboards. Its automotive part business is entirely supported by LG Chem and LG Display by sharing the latters' client channels.

Kwon replaced Jo Seong-jin for the top post. The new LG CEO is experienced in strategizing and handling non-technology fronts such as business strategy and product planning.

Regarding Samsung Electronics' aggressive pitches to promote 8K TVs, the company downplayed the significance of Samsung's moves saying it is too early to make the ultra-high resolution TV mainstream.

"8K TVs are not mainstream yet as the market size is insignificant," said Park Hyoung-sei, head of the home entertainment division, which supervises the firms' TV business. Park also attended the conference.

"The reason why we put up the banner of 'OLED first' is to suggest using OLED panels for 8K TV is the right direction. We don't expect an explosive response for an 8K TV in the market. It needs more time given broadcasters are not ready yet (to broadcast their content in 8K resolution)," he said.

Regarding when the "rollable" TV, which rolls up like a poster, will be launched, the LG CEO Kwon said it will release the product "as early as in the first half or at the latest in the third quarter of 2020." LG introduced the Signature OLED TV R rollable TV at last year's tech fair, here, and then announced that it wants to release the product within 2019 but delayed the launch.

"We had discussions over the right timing of the release of the rollable OLED panels and decided to spend more time to improve reliability of the product, Kwon said. "Once LG Display's Guangzhou plant is ready to mass produce OLEDs, the plant will be able to expand supply capacity, so we plan to roll out the TV as early as in the first half or at the latest in the third quarter of 2020."

LG Electronics is the largest shareholder of LG Display, meaning its TV business is dependent upon the guarantee of production yields (defect rate) for advanced display panels that it procures from LG Display.

At the conference, the senior executive Kwon said LG will never stop exploring ways to pursue open innovation in advancing its artificial intelligence (AI) technology with global tech firms such as Google and Amazon.

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