LG becomes the first major brand for smartphones to withdraw from the market

LG Electronics Inc in South Korea, SEOUL (Reuters), said on Monday that it will end its loss-making mobile division, making it the first major smartphone brand to completely withdraw from the market.

Its decision to pull out will abandon its 10% stake in North America, where it is the number 3 brand, by smartphone titans Apple Inc and Samsung Electronics.

The division recorded nearly six years’ losses totaling $ 4.5 billion, and by abandoning the highly competitive sector, LG could focus on growth areas such as electric vehicle parts, connected devices and smart homes, reads a statement.

In better times, LG was early on marketing with a number of mobile phone innovations, including ultra-wide-angle cameras, and in 2013 was once the world’s third largest smartphone maker behind Samsung and Apple.

But later, its flagship models suffered from both software and hardware crashes, which combined with slower software updates, gradually dropping the brand. Analysts have also criticized the company for a lack of marketing expertise compared to Chinese competitors.

Its world share is currently only about 2%. According to research provider Counterpoint, 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 considered the number 5 brand.

“In South America, Samsung and Chinese companies such as Oppo, Vivo and Xiaomi are expected to benefit from the low to mid-end segment,” said Park Sung-son, an analyst at Cape Investment & Securities.

While other well-known mobile brands like Nokia, HTC and Blackberry have also fallen from great heights, they should not disappear completely yet.

LG’s smartphone division – the smallest of its five divisions, which accounts for about 7% of revenue – is expected to be scrapped on July 31.

In South Korea, the division’s employees will be relocated to other LG Electronics companies and subsidiary carriers, while elsewhere employment decisions will be made at the local level.

LG will provide service support and software updates for customers of existing mobile products for a period that will vary by region, he added.

Talks with knowledge of the matter said the talks to sell part of the business to the Vingroup in Vietnam.