Korean tech giant LG Electronics has trimmed down its smartphone production in recent times. The company had even outsourced the production of its budget models using the ODM model. The company has now announced plans to further expand the production of its mid-range models using ODM.
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In a statement reportedly made in a conference call after the release of its Q3 revenue, Jae-Seok Shin, head of the project management team at LG Electronics’ Mobile Communications Division, said, “We will use the ODM as a lever for improving the cost structure of the smartphone business.” He stated further; “We have been making efforts to raise cost competitiveness by reducing fixed costs and optimizing production sites.” “We will expand the application of ODM from existing low-end smartphones to mid-range phones,” he said.
An ODM (original design manufacturer) is a company that takes the original specifications of another company or individual and builds the design to the product specifications. Samsung is also using an ODM model on some of its mid-range models in China where sales have been on the low. The model enables the company to significantly cut production cost and be in a good position to offer competitive prices for its phone. LG will also benefit from the ODM arrangement in the same way.
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