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South Korea’s LG Electronics has carried out a major reorganization of its research organizations this year.

The company has streamlined research organizations under chief executive officer (CEO) as it discontinued operations of the mobile communications (MC) unit. It has also consolidated its overseas research institutes in the United States and China.

The company aims to cut costs through streamlining research organizations. LG Electronics spends more than 3 trillion won ($2.54 billion) on research and development (R&D) every year. The company plans to enhance the efficiency of managing researchers so that it could strengthen its ability to acquire patent rights and develop technologies.

The number of LG Electronics’ research organizations under its CEO has declined to 54 from 58 at the end of June, according to the company on Wednesday. The company’s Home Appliance & Air Solution (H&A) Control Research, Yantai MC Lab, MC North America R&D Lab, and LG Technology Center of America (LGTCA) have been consolidated.

The H&A Control Research has played a pivotal role in research on technologies such as artificial intelligence (AI) and adopting them into LG Electronics’ home appliances. It is said that the company has decided to consolidate the organization as its research on AI is on track and some of the roles in the H&A R&D unit are overlapped.

Changes were also made to the overseas research organization. The number of overseas research organizations has been reduced to 22 from 27 at the beginning of this year. The company has closed down LG Technology Center Moscow (LGTCM) in Russia and LG Technology Center Europe (LGTCE) in Germany, while opening up one in the Czech Republic.

After its decision to withdraw from the MC business, LG Electronics shut down its domestic MC research organizations and started a process to restructure Yantai and North American MC research organizations. China now has four research labs while there are only two left in North America.

LG Electronics is expected to reshape its remaining Latin American MC R&D team and European MC R&D team in the near future depending on the company’s overseas business strategy.

LG Electronics shut down its LG Electronics (Shanghai) Research and Development Center (LGCNC). LGCNC recorded total assets of 10.2 billion won and a net profit of 68 million won in the third quarter. The company has decided to exclude LGCNC from its consolidated financial statement in a move to enhance the efficiency of the operation of its research organizations. LG Electronics recognized a loss of 178 million won in the third quarter due to the liquidation of LGCNC.

Meanwhile, LG Innotek increased the number of research organizations to six in June from two. It newly established research organizations for each business unit, including optics solutions and substrate and materials.

There is a possibility of an additional restructuring as LG Group is expected to conduct a large-scale personnel reshuffle at the end of this year. (Reporting by Hyun-ji Sohn)