LG Elec says considers making contract handsets

SEOUL, June 10 (Reuters) - LG Electronics Inc (066570.KS), the world's fourth-biggest mobile phone maker, said on Tuesday it was considering contract-manufacturing handsets but there were no discussions in progress.

"We are considering the possibility of entering talks with OEM companies," said Choi Jun-hyuk, an LG spokesman.

Leaders in the original equipment manufacturer (OEM) industry such as Foxconn International (2038.HK) and Flextronics (FLEX.O) are likely to be LG's future partners should LG decide to outsource handset making, he said.

"It is true that companies like Foxconn and Flextronics are the world leaders in OEM manufacturing, so it would be natural that there would be talks with them when the time comes."

Investors and analysts have been expecting LG to outsource production of some low-end phones due to rapid demand growth and higher labour costs at home.

Bigger rivals such as Nokia (NOK1V.HE) and Motorola Inc (MOT.N) have already outsourced a large portion of their production to OEM companies.

Choi said LG, which runs six mobile phone plants at home and abroad, can meet mobile phone demand for the time being by expanding its own capacity.

Despite the slowing global economy, South Korea-based LG is expected to surpass this year's mobile phone sale target of 100 million units helped by solid sales of new high-end phones such as touch-screen Viewty and a weaker won currency KRW=. (Reporting by Marie-France Han and Rhee So-eui; Editing by Keiron Henderson)