LG Electronics is reportedly preparing to restructure, according to a number of reports, with the focus shifting from mobile phones to televisions in order to appease lenders.
According to a report in Korea’s Electronics Times, financial institutions are increasingly concerned about the risks associated with Korean ‘chaebols’ (corporate conglomerates).
The concerns follow recent liquidity problems at a number of conglomerates, including shipping-focused chaebol STX and financial service giant Tongyang.
While LG will continue to manufacture smartphones over the long term, around 10% of the workforce at the company’s MC (Mobile Communications) division under threat.
Managers are evaluating whether to rapidly cut staff, reduce headcounts through natural attrition or directly transfer staff to the company’s home electronics division.
“Recently vice-chairman Koo Bon-joon is often mentioning the smartphone business risk,” a company insider told Electronics Times.
“In the long run the smartphone business is important, but he is trying to concentrate on the TV business, something that LGE can do well in.”
Other support departments, including marketing and purchasing, are also at risk.
At the same time, the company has announced a 4 trillion won ($4 billion) investment in facilities for embedded displays next year in anticipation of rising demand.
The company is ahead of compatriot Samsung Display as the world’s largest supplier of display panels, with chief financial officer Jeong Ho-young telling the Korea Times the company intends to continue investing in the area.
“There won’t be any drastic cut in investment for facilities next year. We have business areas that need proper investment, on time.
“Our 2014 investment plan is based on the fact that demand for display solutions are on the normal track, not just in China but in major markets.”
The company is also reportedly remaining cautious about curved or flexible display technology.
“This is a new business and LG is trying hard to take off curved displays. Let’s see what will happen,” he says.
News of the restructure comes after the company announced it was establishing a premium product line across all of its product categories in August, from smartphones and tablets to televisions and air conditioners.
The product line, collectively be known as the “G Project”, features a logo known as a “G Mark” and feature a product name beginning with the letter G, with the LG G2 smartphone the first product on offer.
The company has also established an internal committee made up of executives from each of the company’s business units, known as the Enterprise-level G Project Deliberation Committee, determines which products use the new branding.
The new product line comes after the company released an ambitious goal to become the world’s largest home appliance manufacturer by 2015 alongside an increased focus on its smart home solutions.
The news comes a day after the company was accused of spying on its users, with its smart TVs reportedly set up to send back details of every channel change and file viewed on the device to the consumer electronics giant.