LG is closing its oldest China factory and walking away from budget audio

LG Electronics will shut down its Huizhou factory in Guangdong, China, by October 2026, ending 34 years of operation at its very first Chinese production site. The plant assembles around 2.6 million XBOOM audio units a year and generates roughly $276 million in revenue — but profit has fallen three years running, from $9 million in 2023 to around $7 million in 2025. For LG, the math no longer works.

The price war it lost

The Huizhou facility opened in 1993 as a strategic foothold in China, built on the promise of low manufacturing costs. That advantage is long gone. Chinese audio brands now undercut LG on price, speed, and scale in the budget segment — and competing there has become, in LG's own cold arithmetic, economically pointless. The Elec first reported the closure and the three options LG is weighing for the subsidiary's future: shift production to its Vietnam hub in Haiphong, expand joint design manufacturing (JDM) deals with Chinese firms like Skyworth and AUCMA, or liquidate the subsidiary outright.

LG has already quietly started down the JDM path — it signed its first such deals with Chinese partners for budget appliances earlier in 2025. That means future low-cost XBOOM models could effectively be made by the very competitors LG failed to beat on price.

What this means for buyers

For US and UK consumers, the practical consequences depend on which post-closure path LG picks. A Vietnam production transfer could mean longer lead times and possible price adjustments. JDM manufacturing through Chinese partners introduces a different kind of uncertainty around consistency and supply. Either way, the budget XBOOM lineup faces disruption after October 2026.

At the premium end, LG is moving aggressively. The company used CES 2026 to launch the Sound Suite, a modular soundbar system with Dolby Atmos FlexConnect — the flagship H7 starts at $999.99, per the LG CES 2026 announcement. That price point signals exactly where LG wants to compete: not against $50 Bluetooth speakers, but against Sonos and Bowers & Wilkins.

A pattern, not a one-off

The Huizhou closure fits a clear pattern. LG exited the China smartphone market in 2018. LG Display sold its Guangzhou LCD plant in 2025. Now XBOOM mass production joins the list. Korean conglomerates are systematically pulling back from price-sensitive manufacturing in China, reinvesting the savings into higher-margin categories like OLED panels, AI home appliances, and premium audio. The retreat from cheap is deliberate — and it's not over yet.