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VinGroup, A Leading Candidate to Buy LG Mobile’s Smartphone Business
Back in 2018 VinGroup formed VinSmart, a subsidiary devoted to the smartphone market and released 4 models, ranging in price from $107 to $285, came in only two colors (black and white) and were relatively simple devices with one or two cameras, but were based on Qualcomm chipsets and were tested by Qualcomm for quality. Since the company had a vast retail empire they were able to offer both long warranty (18 months) with over 500 customer centers across the country and initially offered the phones at what they called a “3 No” price policy, which meant that the product would be sold at cost + selling cost, without depreciation, interest, or any financial costs.
At the onset the company used Chinese ODMs and assembled some of the products but began setting up R&D centers in the US, Korea, Japan, China, Israel, and Singapore to work with local product developers. The company began to develop and produce its own phones this year, releasing the $177 Live 4 model and had expected to launch two more lower-priced models in 1H, but the releases were delayed by COVID-19. The company’s factory in Hanoi can currently produce 26m smartphones/year with a target, after expansion, of 125m.
VinGroup has recently announced its intention to issue ~$303m of domestic bonds to finance both its automobile and smartphone businesses, and while the bulk of the capital will go toward the automotive business, VinGroup, or one of its subsidiaries is considered to be a front-runner in the potential purchase of LG Electronics’ mobile phone business. VinGroup has worked directly with LG as far back as 2012, with the development and production of LG’s Nexus series of smartphones. Google, Facebook and Volkswagen have all been mentioned as possible suitors for the LG mobile division.
Back in 2018 VinGroup formed VinSmart, a subsidiary devoted to the smartphone market and released 4 models, ranging in price from $107 to $285, came in only two colors (black and white) and were relatively simple devices with one or two cameras, but were based on Qualcomm chipsets and were tested by Qualcomm for quality. Since the company had a vast retail empire they were able to offer both long warranty (18 months) with over 500 customer centers across the country and initially offered the phones at what they called a “3 No” price policy, which meant that the product would be sold at cost + selling cost, without depreciation, interest, or any financial costs.
At the onset the company used Chinese ODMs and assembled some of the products but began setting up R&D centers in the US, Korea, Japan, China, Israel, and Singapore to work with local product developers. The company began to develop and produce its own phones this year, releasing the $177 Live 4 model and had expected to launch two more lower-priced models in 1H, but the releases were delayed by COVID-19. The company’s factory in Hanoi can currently produce 26m smartphones/year with a target, after expansion, of 125m.
VinGroup has recently announced its intention to issue ~$303m of domestic bonds to finance both its automobile and smartphone businesses, and while the bulk of the capital will go toward the automotive business, VinGroup, or one of its subsidiaries is considered to be a front-runner in the potential purchase of LG Electronics’ mobile phone business. VinGroup has worked directly with LG as far back as 2012, with the development and production of LG’s Nexus series of smartphones. Google, Facebook and Volkswagen have all been mentioned as possible suitors for the LG mobile division.
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Barry Young
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