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Vingroup eyes LG’s smartphone business: Reports

Jan 22, 2021 (Gmt+09:00)

LG Electronics' production facility in Haiphong Campus, Vietnam
LG Electronics' production facility in Haiphong Campus, Vietnam

Vietnam’s largest conglomerate Vingroup is interested in acquiring part of LG Electronics Inc.’s smartphone operation to bolster its high-tech businesses, according to local newspaper reports.

Vingroup is seeking to buy the North American operation of LG’s smartphone business, including its sales networks, after-sales services and R&D staff, as well as plants in Central and South America, NewsPim, a Korean news provider, reported on Wednesday.

The report came shortly after LG Electronics Chief Executive Kwon Bong-seok said that the home appliance maker is considering selling the loss-making smartphone division.

“Given the difficulty of selling the mobile communication division as a whole, LG is considering splitting the sale,” NewsPim quoted an unidentified investment banking source as saying on Jan. 20.

The division’s cumulative losses of 5 trillion won ($4.5 billion) has spurred market chatter that it may be put up for sale, or downsized. Vingroup has been speculated as one of potential buyers of the division, along with Chinese companies who are gearing up for global expansion.

Last year, market rumors had it that Vingroup has already held talks with LG to acquire the latter’s smartphone operation. But sources told Market Insight that there has been no progress in these talks since the start of this year and now LG is in discussions with unidentified Chinese bidders. Market Insight is the capital news outlet of The Korea Economic Daily.

LG's OLED rollable smartphone unveiled at CES 2021 earlier this month
LG's OLED rollable smartphone unveiled at CES 2021 earlier this month

Meanwhile, the Korea Times reported on Thursday that Vingroup has made the best offer among bidders to acquire all of LG’s smartphone manufacturing plants in China, Vietnam and Brazil, citing an unnamed source.

Vingroup is only interested in the manufacturing facilities in the three countries, not their R&D operations, the newspaper added.

The report contradicts an earlier report by NewsPim that LG’s smartphone plant in Vietnam would be excluded from the package of assets to be acquired by Vingroup.

Given the cumulative losses over the past five years, estimated valuations on LG’s mobile communications division vary, from $500 million to billions of dollars.

IT giants such as Google and Facebook could show interest in LG’s smartphone operation to enhance their Internet of things businesses, securities industry sources said.

LG Electronics had a 12.9% share in North America's smartphone market last year, according to Strategy Analytics, a market research firm.

Vingroup is the third-largest handset maker in Vietnam, after Samsung Electronics and China’s Oppo. Since entering the smartphone market in 2018, the Vietnamese group has been producing its smartphones through original design manufacturing contracts with Chinese companies.

Write to Ri-Ahn Kim at knra@hankyung.com

Yeonhee Kim edited this article.

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