LG’s CEO, in January 2021, had confirmed that the company was exploring possibilities for its mobile phone business. The company’s mobile phone business had been making losses consistently
LG Electronics Inc. (LG) is closing its mobile business unit. The company informed that the decision has been approved by its board of directors. It is not clear if the company will also stop supplying smartphone components like display units to global brands. This, however, looks highly unlikely.
“LG’s strategic decision to exit the incredibly competitive mobile phone sector will enable the company to focus resources in 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,” read an official statement by LG.
$750.63 million loss in 4Q 2020
LG’s CEO, in January 2021, had confirmed that the company was exploring possibilities for its mobile phone business. The company’s mobile phone business has been consistently making losses in the markets.
The LG Mobile Communications Company had eatlier announced full-year 2020 revenues of KRW 5.22 trillion (USD 4.66 billion). Fourth-quarter sales of KRW 1.39 trillion (USD 1.24 billion) were 4.9 percent higher than the same quarter of 2019 but 9.2 percent lower than the previous quarter due to shortages of 4G chipsets and sluggish sales of premium smartphones in overseas markets. The full-year operating loss totaled KRW 841.20 billion (USD 750.63 million), reflecting increased marketing investments to support flagship devices, partially offset by fixed cost reductions due to manufacturing efficiencies.
LG will provide service support and software updates for customers of existing mobile products for a period of time which will vary by region. LG will work collaboratively with suppliers and business partners throughout the closure of the mobile phone business. Details related to employment will be determined at the local level.
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. 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 July 31 although inventory of some existing models may still be available after that. Though LG had an almost negligible share in the global smartphone market, companies like Oppo, Vivo, Mi and Motorola might be able to benefit out of its exit from the mobile phone business.
