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Tech Hub

LG Electronics Shuts Down Smartphone Business Due To Years Of Losses

LG Electronics, South Korea’s second-largest appliance firm after Samsung, has on Monday, April 5 announced it will be shutting down its mobile phone business, after losing billions of dollars in recent years.

The company announced the new development in a statement, saying that the phone production unit has recorded losses for 23 consecutive quarters since 2015, with the cumulative deficit reaching about 5 trillion won ($4.4 billion) by the end of last year.

LG made many innovations including ultra-wide angle cameras, rising to third largest smartphone maker in 2013, however bosses said the mobile phone market had become “incredibly competitive“.

The firm was once considered a pioneer of the Android operating system, collaborating with Google on the Nexus series in the early 2010s.

However, it has long struggled to increase sales, entering the market late and facing tough competition from emerging cheaper Chinese rivals such as Huawei.

It was regularly listed among the world’s top 10 smartphone manufacturers but according to analytics firm, Counterpoint Research, the last time it recorded a global market share of three percent or more was in the second quarter of 2018.

The smartphone arm of LG has “failed to produce results” amid “intensifying price competition among major competitors in the entry-level mobile phone market”, the company said in a statement.

LG said exiting the smartphone business will allow it to focus on growth areas such as electric vehicle components, connected devices, smart homes and artificial intelligence.

In the press statement, the company said the decision has been approved by its board and the company expects to fully exit the mobile phone business by the end of July.

LG is the third biggest smartphone brand in the U.S., making up about 11% of all smartphone sales in the country last year, according to analytics firm, Counterpoint Research.

The company reportedly held talks with Vingroup, a Vietnam-based conglomerate focusing on technology, real estate development and others, over a potential sale, but it broke down over price differences, according to local reports.

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