LG Working on Chips for Mobile Devices Amid Push for Smartphones

March 2 (Bloomberg) -- LG Electronics Inc., the world’s third-largest maker of mobile phones, said it is working to develop its own chips for smartphones to strengthen the company’s handset business.

“We’re working on it, but we haven’t come to any specifics we can announce right now,” Ken Hong, a spokesman for Seoul-based LG, said by telephone today.

LG would benefit from developing its own chips, known as application processors, by saving costs and time to introduce new devices, said Soh Hyun Cheol, an analyst at Shinhan Investment Corp. in Seoul. In January, the company’s mobile division reported a loss for a third straight quarter after it lagged behind HTC Corp. and Samsung Electronics Co. in rolling out new smartphones.

“This can be very positive for LG,” Soh said. “Being able to get key components within their own supply chain can be a good advantage in beating rivals.”

MtekVision Co., a South Korean maker of semiconductors used in communication devices, is looking into developing chips with LG, Kim Chang Gyo, a spokesman for MtekVision said, confirming a Feb. 28 report by Digital Times. Hong neither denied nor confirmed the report.

Samsung and Apple Inc. are the only handset makers that design chips that go into their smartphones, according to Kang Yoon Hum, a Seoul-based analyst at NH Investment & Securities Co. LG has used processors from Qualcomm Inc., Texas Instruments Inc. and Nvidia Corp. in smartphones, according to Hong.

LG’s mobile unit aims to return to profit this year by introducing new smartphones, including a model capable of recording 3-D images, Park Jong Seok, head of the business, said Feb. 14. The electronics maker aims to quadruple smartphone sales this year with 20 new models and plans to expand its research and development staff by 15 percent, LG said Feb. 15.

To contact the reporter on this story: Jun Yang in Seoul at jyang180@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net