LG is first major smartphone brand to bow out of market

It will wind down loss-making division, focus on growth areas

LG Electronics' older smartphones. LG was once in 2013 the world's third-largest smartphone manufacturer behind Samsung and Apple.
LG Electronics' older smartphones. LG was once in 2013 the world's third-largest smartphone manufacturer behind Samsung and Apple.PHOTO: REUTERS

SEOUL • South Korea's LG Electronics said yesterday that it will wind down its loss-making mobile division - a move that is set to make it the first major smartphone brand to completely withdraw from the market.

Its decision will leave its 10 per cent share in North America, where it is the No. 3 brand, to be gobbled up by smartphone titans Apple and Samsung Electronics.

The smartphone division has logged nearly six years of losses totalling some US$4.5 billion (S$6.05 billion), and 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, the company said in a statement.

In better times, LG had been early to market with a number of cellphone innovations, including ultra-wide angle cameras, and was once in 2013 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 favour.

Analysts have also criticised the company for lack of expertise in marketing compared with its Chinese rivals.

Currently its global share is only about 2 per cent. It shipped 23 million phones last year, against Samsung's 256 million, 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.

"In South America, Samsung and Chinese companies, such as Oppo, Vivo and Xiaomi, are expected to benefit in the low-to mid-end phone segment," said Mr Park Sung-soon, an analyst at Cape Investment and Securities.

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 smartphone division - the smallest of its five divisions, accounting for about 7 per cent 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.

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

REUTERS

A version of this article appeared in the print edition of The Straits Times on April 06, 2021, with the headline 'LG is first major smartphone brand to bow out of market'. Subscribe