Highlights:
- LG’s mobile business has been losing money for nearly six years.
- LG was well known for its mobile phone innovations in the market.
- Its global market share is currently about 2%.
LG Electronics, based in South Korea, announced on Monday that it would close its loss-making mobile division, making it the first major smartphone brand to exit the market entirely.
Its decision to exit would enable smartphone titans Apple and Samsung Electronics to devour its 10% market share in North America, where it is the No. 3 brand.
The division has lost nearly $4.5 billion (roughly Rs. 33,010 crore) in nearly six years, and LG said in a statement that exiting the highly competitive sector would enable it to concentrate on growth areas such as electric vehicle components, connected devices, and smart homes.
Also Read: 11 Best WhatsApp Alternative Messaging Apps You Must Try
LG was once the world’s third-largest smartphone maker, behind Samsung and Apple, and was first to market with a variety of smart phone innovations, including ultra-wide-angle cameras.
However, the brand’s flagship models later suffered from both software and hardware flaws, which, coupled with sluggish software updates, saw the brand gradually lose favour. Analysts have also chastised the organisation for lacking marketing expertise in comparison to Chinese competitors.
Its global market share is currently about 2%. According to Counterpoint Research, it shipped 23 million phones last year, compared to 256 million for Samsung.
In addition to North America, it has a significant presence in Latin America, where it is the fifth most popular brand.
Park Sung-soon, an analyst at Cape Investment & Securities said, “In the low to mid-end segment in South America, Samsung and Chinese companies such as Oppo, Xiaomi and Vivo are expected to benefit.”
Other well-known smartphone brands, such as Nokia, HTC, and Blackberry, have also plummeted from lofty heights, but have yet to fully vanish.
LG’s smartphone division, which accounts for around 7% of the company’s sales, is scheduled to be shut down by July 31.
Employees from the division will be transferred to other LG Electronics businesses and affiliates in South Korea, while decisions on jobs will be taken locally elsewhere.
Customers of current mobile devices will receive service support and software upgrades for a period of time that will vary by region, LG said.
According to sources familiar with the situation, talks to sell a portion of the company to Vietnam’s Vingroup fell through due to disputes over terms.
