LG Electronics Executes Voluntary Retirement Program in TV Division, Pursues Operational Streamlining Amid Chinese Price Offensive

Voluntary retirement for senior employees to facilitate workforce renewal
Global No. 2 position in TV market under threat from Chinese price offensive
Eroding share in premium TV segment as Hisense and others gain ground

LG Electronics is implementing a voluntary retirement program within its TV Business Division. This marks the first restructuring initiative in two years since 2023, attributed to shrinking market share under mounting price competition from Chinese firms and a sharp operating loss recorded in the second quarter. Through this program, targeting long-tenured employees, LG Electronics aims to enhance operational efficiency while simultaneously seeking new growth avenues, including launching mid- to low-end appliances in collaboration with Chinese manufacturers to penetrate emerging markets such as Southeast Asia and Africa.

Workforce Aging with Declining 30s–40s Cohort, Retirement Program for 50s and Above

According to industry sources on the 19th, LG Electronics has begun accepting applications for voluntary retirement from employees in its Media & Entertainment Solutions (MS) Division who are over 50 or have shown weak performance over the past three years. The program, scheduled for next month, will provide applicants with severance benefits equivalent to up to three years of annual salary depending on tenure and time remaining until retirement, along with tuition support for children. The company explained that the initiative is intended to enhance efficiency and flexibility in workforce management while easing personnel bottlenecks through senior staff rotation.

Over the past two years, LG Electronics has experienced a marked demographic shift, with employees in their 30s and 40s declining while those over 50 have increased, accelerating workforce aging. Regulatory filings show that as of last year, LG Electronics had 11,993 employees over 50, representing 16.3% of the total. Compared with 2022, the number of employees over 50 rose 23.7%, while the critical 30–49 cohort fell 2.5%, fueling calls for workforce realignment. LG Electronics previously carried out voluntary retirement programs in 2022 and 2023, targeting employees aged 55 and above, offering severance benefits worth up to three years of annual salary.

The restructuring pressure is not unique to LG Electronics. Late last year, LG Display also launched its first office staff retirement program in five years as part of cost-cutting and efficiency measures. Eligible applicants included employees over 40 or those at manager level with at least five years of service, who received 30 months of base pay, six months of outplacement support, and tuition aid. This June, LG Display extended large-scale voluntary retirement to production-line workers, offering 45 months of base pay to employees aged 45 and above. In addition, more than 200 staff members are being seconded to affiliate LG Innotek.

TV Business Slump Leads to 46.6% Operating Profit Decline in Q2

The restructuring drive is closely tied to deteriorating earnings. LG Electronics’ second-quarter operating profit came in at $490 million, down 46.6% year-on-year. In particular, the MS Division, responsible for TV operations, reported an operating loss of $147 million. Although LG Electronics still holds the No. 2 position globally in revenue terms behind Samsung Electronics, its market share is slipping under Chinese competition. Shipment-based share stood at just 10.7%, effectively placing LG in fourth place behind Chinese players TCL and Hisense.

The surge in Chinese TV shipments is attributed to both expanding domestic demand and an aggressive price-cutting strategy. Market research firm TrendForce noted, “Chinese TVs are sold in global markets at prices 20–50% lower than competitors,” adding that government subsidies for replacing older devices have further boosted output. Forced into the price war, LG Electronics lowered its own pricing. According to its semiannual report, average TV selling prices fell 2.5% year-on-year in the first half, while monitor and digital signage prices dropped 1.8% and 3.6%, respectively.

The Chinese offensive has also spread into the premium TV segment, traditionally dominated by Korean firms. Data from Counterpoint Research show that while Samsung retained the top spot in global premium TV shipments in the first quarter, its market share plunged 11 percentage points in just one year. LG, which ranked second a year earlier, saw its share decline from 23% to 16%, falling to fourth place. Premium TVs encompass OLED and quantum-dot models, as well as LCDs of 8K or higher and micro-LED displays.

The market share ceded by Korean firms has been captured by Hisense and TCL. Historically focused on low-end models, both companies leveraged domestic sales growth to boost global presence, recording triple-digit shipment growth rates year-on-year. They are now targeting large-format and premium segments. Each gained six percentage points in market share over the past year, overtaking LG and closing in on Samsung. In fact, Hisense climbed to second place in premium TVs with a 20% share, narrowing the gap with Samsung to just eight percentage points, while TCL followed with 19%.

Pivot Toward Mid- and Low-End Appliance Markets Through Partnerships with Chinese Firms

With its position in premium TVs under siege, LG Electronics has shifted focus to mass-market appliances since last year. Rapidly rising demand in Southeast Asia, Latin America, and Africa, driven by rising incomes, has raised concerns that these high-growth markets could fall entirely under Chinese dominance. Yet LG found its existing portfolio insufficient to compete. Concluding that matching Chinese pricing was impossible under its current production model, the company opted for strategic partnerships with value-driven Chinese manufacturers.

Earlier this year, LG announced co-development projects with Chinese appliance makers, introducing a 9kg drum washing machine with Skyworth and a 400L two-door refrigerator with Okuma. Skyworth is China’s fourth-largest appliance maker after Hisense, TCL, and Xiaomi, while Okuma, a state-owned high-tech enterprise, specializes in cold-chain systems. Crucially, the collaboration went beyond contract manufacturing (OEM) to joint development (JDM), encompassing product planning and design. Mass production has already begun, with distribution to Europe slated for this month.

Upon validating the business viability of refrigerator and washing machine JDM projects, LG Electronics plans to extend the model to other appliances such as air conditioners and dryers. Distribution is also expected to expand from Europe to China, Southeast Asia, Latin America, and Africa. An industry insider commented, “Demand for cost-efficient appliances is growing rapidly, particularly among lower-income households in advanced economies and consumers in developing markets. A new business model combining LG’s brand equity with Chinese cost competitiveness has emerged in the global appliance sector.”