South Korean electronics manufacturer LG has decided to wind down its mobile phones unit after admitting defeat in the global smartphone market.
LG said on Monday it had made a “strategic decision to exit the incredibly competitive mobile phone sector” to focus on growing businesses such as supplying electric car parts.
It will wind down its mobile phone business by 31 July, although it said it may continue to sell phones after that point. Users of LG phones will receive service support and software updates “for a period of time which will vary by region”, it said.
The company, a “chaebol” conglomerate with interests ranging from chemicals and TV manufacturing to South Korean baseball and basketball teams, did not disclose how many jobs would be affected by the move.
The company said it would focus on other growth businesses such as connected devices for the home, robotics and artificial intelligence, as well as electric vehicle components. LG Chem, a subsidiary, is one of the world’s major suppliers of the battery cells used in electric cars, while LG also makes parts such as touchscreen displays used on car dashboards.
LG will join the likes of Blackberry, HTC and Nokia among the fallen giants of the mobile phone industry which have stopped making handsets, although phones are still released under all three brands after the intellectual property was sold.
The global mobile phone market leaders are Apple, the US maker of premium iPhones, and Samsung, another Korean conglomerate which generally makes cheaper devices. The growth of Chinese manufacturers such as Huawei and Xiaomi has added further pressure on prices.
LG was the world’s third-largest phone manufacturer in 2013, according to Reuters, but in recent years it had struggled with poor reviews of its phones and did not win large numbers of customers with gimmicks such as a “banana phone” with a curved screen, and it faced legal action related to software problems that rendered some devices unusable. LG‘s smartphone division has logged nearly six years of consecutive losses totalling about $4.5bn (£3.3bn), according to calculations by Reuters.
Sales of 23m phones meant LG commanded about 2% of the global mobile phone market at the end of 2020, according to data from Counterpoint, a research firm. In contrast Apple and Samsung had 21% and 18% of the market respectively. However, in the US LG had 9% of the market.
LG’s South Korean rival Samsung could be the among the biggest beneficiaries of its withdrawal because of its similar offering in lower-cost phones, one analyst said.
“In the United States, LG has targeted mid-priced – if not ultra-low – models and that means Samsung, which has more mid-priced product lines than Apple, will be better able to attract LG users,” said Ko Eui-young, an analyst at Hi Investment & Securities, a South Korean bank.
LG is still a major player in consumer electronics, including in television sales. It had about 16% of the global TV market in 2020, according to the research firm Omdia.
The company will also continue to work on mobile technology related to electric vehicles, as coming 6G networks allow for even faster transfer of data to and from vehicles, potentially a burgeoning market as autonomous driving capabilities become widespread.
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