LG Electronics to withdraw from smartphone business after billions in loss

Seoul, South Korea: LG Electronics, South Korea's second-largest appliance firm after Samsung, is closing down its mobile phone business, the company said Monday, after the division lost billions in recent years.

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

With the decision to withdraw from the booming smartphone market, LG became the first major electronics maker to pull out from the same. 

LG leaves behind a market share of 10 percent in North America which awaits to be gobbled up by Samsung and Apple. 

But 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 tracker Counterpoint, the last time it recorded a global market share of three percent or more was in the second quarter of 2018.

In 2019, LG had a market share of only 2 percent, and shipped some 23 million smartphones, compared to 256 million for Samsung, Reuters reported. 

The 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.

The division 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.

The decision will enable the firm to "focus resources in growth areas such as electric vehicle components", robotics and smart homes, it added.

While several of its peer firms like Blackberry, Nokia, and HTC fell from lofty heights, they're yet to disappear completely. 

But LG is expected to wind down its smartphone business by 31st July 2021. 

LG reportedly held talks with Vietnam's Vingroup over a potential sale, but it broke down over price differences, according to local reports.

The company is behind many pioneering smartphones technology that ushered the new ear in the industry, including high-resolution displays, wide-angle cameras, and more. 

With inputs from AFP. 

Share this story