LG Electronics said on Monday it would close down its loss-making smartphone business.
Back in 2013 LG was the third largest smartphone manufacturer in the world, and now it appears phone manufacturer is going the same route as HTC. In January, the South Korean electronics giant said it was looking at all options for the division after almost six years of losses totalling around $4.5bn (£3.3bn). This is despite the company ranking as the third most popular brand in North America, but has slipped in other markets. LG phones are still fairly common in its domestic South Korean market.
But bosses said the mobile phone market had become “incredibly competitive”. While Samsung and Apple are the two biggest players in the smartphone market, LG has suffered from its own hardware and software issues.
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 and artificial intelligence, it said in a statement.
Last year it shipped 28 million phones, which compares with 256 million for Samsung, according to research firm Counterpoint.
The smartphone business is the smallest of LG’s five divisions, accounting for just 7.4% of revenue. Currently its global mobile phone market share is about 2%. 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,” a spokesman added.
Analysts said South Korean rival Samsung and Chinese companies such as Oppo, Vivo and Xiaomi are likely to benefit the most from LG’s exit. Smartphone makers struggled during the pandemic with sales down about 10% in 2020 mainly due to lockdowns limiting store openings.
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