LG Reshuffles Management To Save Struggling Android Phone Business

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LG on Wednesday announced a major management reshuffle and corporate restructuring meant to help it save its struggling Android phone business. LG Home Entertainment Company President Brian Kwon will hence be taking over the Mobile Communications division, effective December 1. He'll be replacing the current President (effectively CEO) Hwang Jeong-hwan who also serves as the chief of the conglomerate's Convergence Business Development Office. Starting from next month, Mr. Hwang will be entirely dedicated to his other role and won't be involved in day-to-day mobile operations any longer.

LG said it's pleased with Mr. Hwang's contributions to its mobile business which he took over a year ago. Improved quality assurance practices and product development efficiency have been highlighted as his main achievements during his short sting as LG's mobile chief, though he failed where it arguably mattered the most – sales. That's where Mr. Kwon comes in, who has an established track record of large-scale turnarounds. He most recently revived the company's TV, PC, and audio division, bolstering its commercial performance to such a degree that the unit itself played a vital role in LG's record-breaking quarters posted over the course of this year.

LG Electronics Chief Executive Officer Jo Seong-jin is also seeing his responsibilities reworked as part of the same change and he'll now cede more of his everyday responsibilities to President and Chief Financial Officer David Jung in order to focus on large-scale strategy and long-term planning, the company said. Mr. Jung will consequently start supervising the chaebol's support operations throughout its home country, in addition to overseeing its global communications and overall corporate security framework. The latest wave of changes also comes alongside a rebranding of the LG Vehicles Components Company which will now be known as Vehicle Component Solutions. Likewise, LG's Business-To-Business Company is being rebranded into Business Solutions Company. VCC's existing Executive Vice President Kim Jin-yong will be given the role of a President of the rebranded unit which is now extending its focus areas.


Background: LG's mobile unit has been consistently losing money for several years now, though that didn't stop its business as a whole from thriving. Over the three-month period ending September 30, LG generated $13.76 billion in revenue and made over $667 million in operating profit, with the latter rising by over ten percentage points year-on-year. Its UHD and OLED TV sales played a major part in that achievement, much like the performance of its appliances. Due to that state of affairs, some analysts speculated the firm might be considering an exit from the smartphone market, though LG repeatedly dismissed that notion as baseless, asserting its mobile strategy is a long-term affair.

Impact: While the newly announced management reshuffle and corporate restructuring are meant to benefit LG as a whole, they're first intended to address the firm's struggling mobile unit. The division lost over $130 million in the last quarter alone and was responsible for billions in losses posted over the last several years. While LG managed to reduce its deficit since 2017, not many industry watchers are showing any signs of optimism regarding its prospects. Whether Mr. Kwon manages to turn things around remains to be seen but one thing is certain – LG will be making some radical moves in the mobile industry moving forward in an effort to wrestle its way out of its current predicament.