LG quits the smartphone business
LG Electronics has announced that it is closing its mobile business unit.
The decision was approved by its board of directors on Monday 5 April 2021.
According to a statement released by the company, LG’s "strategic decision" to exit the incredibly competitive mobile phone sector will enable it to focus resources in other growth areas, such as electric vehicle components, connected devices, smart homes, robotics, artificial intelligence and business-to-business solutions, as well as platforms and services.
LG will now comprise four companies: Home Appliance and Air Solution, Home Entertainment, Vehicle component Solutions and Business Solutions.
LG becomes the first major smartphone brand to exit the market. The South Korean company will wind down the loss-making mobile division after failing to find a buyer.
In 2013, the company was the third largest phone manufacturer behind Apple and Samsung. It developed the curved phone screen, folding screen and most recently the expanding, or "rolling" screen
LG's smartphone division has logged nearly six years of losses totalling some $US4.5 billion. According to research provider Counterpoint, LG's current global share is only about 2%. The company shipped 23 million phones last year, compared with 256 million for Samsung,
Current LG phone inventory will continue to be available for sale. LG will provide service support and software updates for customers of existing mobile products in accordance with its contractual obligations, manufacturer’s warranty and consumer laws.
The company says it will also work collaboratively with suppliers and business partners throughout the closure of the mobile phone business.
Across its five companies, LG employs 75,000 people. In South Korea, the division's employees will be moved to other LG Electronics businesses and affiliates, while details related to employment will be determined at the local level, it adds.
LG's phone business was the smallest of the company's divisions, accounting for around 7% of total revenue. LG says it will retain its 4G and 5G core technology patents and will continue to develop communication technologies for 6G.
"Moving forward, LG will continue to leverage its mobile expertise and develop mobility-related technologies such as 6G to help further strengthen competitiveness in other business areas," the company says
"Core technologies developed during the two decades of LG’s mobile business operations will also be retained and applied to existing and future products."
The wind down of the mobile phone business is expected to be completed by 31 July, although the company advises inventory of some existing models may still be available after that.