South Korea’s LG becomes the first major smartphone brand to withdraw from the market

SEOUL (Reuters) – LG Electronics Inc in South Korea will scrap its loss-making mobile division after failing to find a buyer, making it the first major smartphone brand to completely withdraw from the market.

Its decision to pull out will drop its 10% stake in North America, where it is the number 3 brand, by Samsung Electronics and Apple Inc., with domestic competitor expected to have the lead.

“In the United States, LG has targeted mid-priced models – if not ultra-low” models, which means that Samsung, which has more average price lines than Apple, will be able to attract better LG users, “said Ko Eui. , an analyst at Hi Investment & Securities.

LG’s smartphone division recorded nearly six years of losses of about $ 4.5 billion. By leaving the highly competitive sector, LG can focus on growth areas such as components of electric vehicles, connected devices and smart homes, reads a statement.

In better times, LG was early in the market with a number of mobile phone innovations, including ultra-wide-angle cameras, and at its peak in 2013, it was 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.

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 current world share is 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.

While competing Chinese brands like Oppo, Vivo and Xiaomi are not many in the United States, partly due to icy bilateral relations, they and Samsung’s low to mid-range product offerings will benefit from LG’s absence in Latin. America, analysts said.

LG’s smartphone division, the smallest of its five divisions that make up 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 businesses and subsidiaries, while elsewhere employment decisions will be made at the local level.

Analysts said at a conference that LG intends to retain its 4G and 5G core technology patents as well as the core R&D staff, and that they will continue to develop communication technologies for 6G . They have yet to decide whether such intellectual property should be licensed in the future, they added.

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.

LG Elec shares have risen about 7% since an announcement in January that it was considering all options for the business.