LG Electronics in Talks with Vingroup of Vietnam to Sell off Its Smartphone Business

LG Electronics reportedly wants to sell off its smartphone business to Vietnam's Vingroup Co.

Vingroup has reportedly put forward the most attractive offer among the companies that covet LG Electronics' smartphone business.

Vingroup is a large conglomerate in Vietnam with a market capitalization of US$16.5 billion as of the end of 2020. It accounts for 14 percent of the total market capitalization of Vietnamese listed companies. The company is engaged in diverse business areas, including hotels and tourism, real estate, distribution, construction, automobiles, and mobile phones, but its presence is still small on the global stage.

Vingroup entered the smartphone business in 2018. It has been producing smartphones under an original design manufacturing (ODM) contract with LG Electronics. Currently, it is the third largest smartphone producer in Vietnam after Samsung Electronics and Oppo.

If it acquires the smartphone business of LG Electronics, it can make a significant leap forward. LG's reputation, advanced technologies, and sales networks can bring innovation to Vingroup.

Although LG Electronics is reviewing various options under LG Group chairman Koo Kwang-mo's order, the company has reportedly decided to sell off its smartphone business piece by piece as selling it in its entirety is practically difficult.

Vingroup is reportedly interested in taking over the LG Electronics' smartphone business in the United States. It is seeking to advance into the U.S. market through the acquisition. LG Electronics' share of the North American smartphone market was 12.9 percent in 2020.

Meanwhile, LG Electronics president Kwon Bong-seok sent an e-mail to employees on Jan. 20 to reassure them about their job security, but a workforce restructuring appears inevitable no matter how the MC Business Division is overhauled.