Last week, Korean publication The election published an article alleging that LG Electronics was notifying its employees that it was discontinuing its smartphone business. This apparently includes that the development of the rotating smartphone of the company has been stopped, which according to them will start later this year. However, Ken Hong, head of global corporate communications, said XDA that the rumor was ‘definitely untrue’. But it now appears that the rumor had some truth in it.
Yesterday, a plethora of Korean stores reported that LG was leaving the smartphone industry. The clock reports that LG is considering restructuring its business by withdrawing only its premium smartphone line, while New Daily reports that LG is considering selling its smartphone business. Meanwhile, it The Korea Herald reports that Kwon Bong-seok, CEO of LG Electronics, has sent a memorandum internally indicating that major change could come to the smartphone business.
“Regardless of any change in the direction of the smartphone business, the service will be retained, so there is no cause for concern,” he reportedly said. An unnamed LG official said The Korea Herald the following: “As competition in the global mobile device market intensifies, it’s time for LG to make a cold judgment and make the best choice,” the unnamed official explained. “The company is considering all possible measures, including the sale, withdrawal and downsizing of the smartphone business.”
LG later confirmed to The edge that the quoted memo is genuine, but that there is still nothing in stone. In a statement, LG told the publication that “management is committed to making any decision needed to address its mobile business challenges in 2021”, but that “as of today, nothing has been finalized.” According to News Pim, VinGroup, the Vietnamese company that plans to enter the US market, is the highest bidder for LG’s smartphone business. The acquisition of LG’s smartphone business will help them to enter the US quickly, although it has not yet been confirmed that LG will sell its smartphone business at all, let alone VinGroup.
It’s ultimately not surprising to hear that LG Electronics is considering selling its smartphone business. As pointed out The Korea Herald, LG’s smartphone business has shown shortcomings in the phone segment over the past 5 years, bringing operating losses for 23 consecutive quarters since Q2 2015.. the smartphone industry by 2021. LG has implemented various strategies to win back customers. It dropped its G-Series in favor of the Velvet, launched the Explorer project to bring innovative concepts to life, and began outsourcing the production of its budget phones to ODMs.
The loss of LG in the smartphone world would be a big blow to the industry. Although the efforts were not too successful, the smartphones it offered often met needs that no one else provided for. The emphasis on sound quality, for example, has made smartphones sound among sound enthusiasts – they are in fact one of the few remaining OEMs offering headphone jacks in their premium products! They were also at the forefront of some trends in the industry. In particular, the V40 was the first modern smartphone with a triple camera configuration consisting of a main, wide-angle and telephoto lens, a setup that has since appeared in numerous flagships. While the software support and value-for-money of the phones is lacking, there is no doubt that LG smartphones have brought a lot to the table, so we will be disappointed when they are gone. However, there is a chance that the business will turn things around, so we will keep an eye on reports to see where the business is heading in 2021.
Featured image: the LG Wing