South Korea LG Mobiles
A visitor walks by an advertisement of LG Electronics' product at an electronic shop area in Seoul, South Korea. Photo: AP file

LG becomes first major smartphone brand to withdraw from market

By Joyce Lee and Heekyong Yang

South Korea's LG Electronics Inc will wind down its loss-making mobile division after failing to find a buyer, a move that is set to make it the first major smartphone brand to completely withdraw from the market.

Its decision to pull out will leave its 10% share in North America, where it is the No. 3 brand, to be gobbled up by Samsung Electronics and Apple Inc with its domestic rival expected to have the edge.

"In the United States, LG has targeted mid-priced - if not ultra-low - models and that means Samsung, which has more mid-priced product lines than Apple, will be better able to attract LG users," said Ko Eui-young, an analyst at Hi Investment & Securities.

LG's smartphone division has logged nearly six years of losses totaling some $4.5 billion. Dropping out of the fiercely competitive sector would allow LG to focus on growth areas such as electric vehicle components, connected devices and smart homes, it said in a statement.

In better times, LG was early to market with a number of cell phone innovations including ultra-wide angle cameras and at its peak in 2013, it was the world's third-largest smartphone manufacturer behind Samsung and Apple.

But later, its flagship models suffered from both software and hardware mishaps which combined with slower software updates saw the brand steadily slip in favor. Analysts have also criticized the company for lack of expertise in marketing compared to Chinese rivals.

While other well-known mobile brands such as Nokia, HTC and Blackberry have also fallen from lofty heights, they have yet to disappear completely.

LG's current global share is only about 2%. It shipped 23 million phones last year which compares with 256 million for Samsung, according to research provider Counterpoint.

In addition to North America, it does have a sizeable presence in Latin America, where it ranks as the No. 5 brand.

While rival Chinese brands such as Oppo, Vivo and Xiaomi do not have much of a presence in the United States, in part due to frosty bilateral relations, their and Samsung's low to mid-range product offerings are set to benefit from LG's absence in Latin America, analysts said.

LG's smartphone division, the smallest of its five divisions accounting for about 7% of revenue, is expected to be wound down by July 31.

In South Korea, the division's employees will be moved to other LG Electronics businesses and affiliates, while elsewhere decisions on employment will be made at the local level.

Analysts said they were told in a conference call that LG plans to retain its 4G and 5G core technology patents as well as core R&D personnel, and will continue to develop communication technologies for 6G. It has yet to decide whether to license out such intellectual property in the future, they added.

LG will provide service support and software updates for customers of existing mobile products for a period of time which will vary by region, it added.

Talks to sell part of the business to Vietnam's Vingroup fell through due to differences about terms, sources with knowledge of the matter have said.

LG Elec shares have risen about 7% since a January announcement that it was considering all options for the business.

© Thomson Reuters 2021.

©2021 GPlusMedia Inc.

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Ah well, billions down the drain. I'm sure the executive bonuses will be sizable for doing a great job firing all of the foreign employees.

3 ( +3 / -0 )

Peter, LG fires all its foreign management with regular intervals so they don’t become to influential or should rise to top management where Koreans can not match their skills. This happens at nearly all Korean companies. My visa was suddenly revoked and my company apartment locked when I was to be paid over 600.000 Usd in commissions. I had to leave Korea and no Korean lawyer wanted to take the case.

and you are right, closing the phone business will lead to higher profits as the division was bleeding money for years.

I wonder when the few remaining Japanese manufacturers will stop as well as there is no commercial reason for them to continue

9 ( +9 / -0 )

I wonder when the few remaining Japanese manufacturers will stop as well as there is no commercial reason for them to continue

Because the Japanese government gives them unlimited money (almost) for the sole purpose of keeping "national pride" against barbaric Koreans and Chinese.

6 ( +9 / -3 )

robert maesToday  09:38 am JST

I wonder when the few remaining Japanese manufacturers will stop as well as there is no commercial reason for them to continue

They won't, because the Japanese market is big enough for Sony, Sharp, Kyocera, and Fujitsu phone manufacturing to survive. If it weren't they would have stopped manufacturing already and put Taiwanese brands like HTC and Asus in their place.

-3 ( +3 / -6 )

Since almost three years in using a Motorola g6 plus. It's an extraordinarily good value for money phone, really recommendable over a Samsung, for example.

1 ( +1 / -0 )

"Because the Japanese government gives them unlimited money (almost) for the sole purpose of keeping "national pride" against barbaric Koreans and Chinese."

That's not what you've been telling us.

According to your version of the "facts" Japan doesn't have any money thus have to beg some from China and Vietnam.

You must be hurting badly.

-3 ( +1 / -4 )

Nokia is still there. i bet someday Nokia who has still a lot of fans will rise again in the future.

-2 ( +0 / -2 )

Nokia missed the boat and is losing the market. Also Nokia is not Nokia anymore. It is generic and has no unique ups.

Currently sony mobile market share for mobile is also in a nosedive worldwide market. Although the market share is second place (9%) after apple.

But only japan market is not making enough profit for sony mobile.

Many chinese brands are doing better due the pricing and features you get.

LG was one of the pioneers of the Android operating system, collaborating with Google on the Nexus smartphone line and producing some of the best camera and display technology in the category’s early days. Now LG lost the market share because they did not innovate and therefore not competitive. LG tried to change the direction but were to late and other Chinese brands in the lower segment had better price value. Blackberry was also one of the good example. Was popular for a while under business people than teenagers because of ping untill whatsapp or other applications came.

Sorry for Apple fans but this will also definitely happen with Apple also.

There is no mobile company which keeps going for a long period.

2 ( +2 / -0 )

There's the first smartphone in the world, iPhone and then . . . the rest. All run by Google's me too flagrant copy.

-2 ( +0 / -2 )

Apple was not the first smartphone in the world. The Nokia 9100 introduced in 1996 was the first so called smartphone. Although the term smartphone didn't exist. It was called a PDA.

Most people think apple was the first smartphone but apple just introduced a new mobile in a good moment with apps.

Touchscreen already exist before apple.

Apps where before apple just downloadable programs.

Now every one is copying and improving each other technology because there is not much to improve at this moment. Foldable phone are the next step but that may take sometime and is now more for the early adapters.

0 ( +0 / -0 )

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