LG closes global mobile phone business
LG Electronics has made the strategic decision to shut its mobile manufacturing and sales activities worldwide. However, the company will provide service support and software updates for customers of existing mobile products for a period of time which will vary by region. LG will work collaboratively with suppliers and business partners throughout the closure of the mobile phone business. Details related to employment will be determined at the local level.
The strategic decision to exit the mobile phone sector will enable the company to focus resources in growth areas such as electric vehicle components, connected devices, smart homes, robotics, artificial intelligence and business-to-business, as well as platforms and services.
Blaming the “incredibly competitive” mobile phone sector for the decision after years of mounting losses and struggling to stay relevant in the mobile phone sector, LG has not been able to compete with Apple and Samsung as well as rising Chinese manufacturers such as Oppo, Vivo and Xiaomi.
The LG mobile division had revenues of KRW 5.22 trillion ($4.66 billion) in 2020 with a loss of KRW 841.20 billion ($750.63 million). Sales were also 9.2 percent down during the important Christmas quarter as a result of shortages of 4G chipsets and sluggish sales of premium smartphones in overseas markets.
This is in contrast with the LG Electronics group 2020 turnover of KRW 63.26 trillion ($56.45 billion) and operating profit of KRW 3.20 trillion ($2.85 billion), an increase of 31.1 percent over 2019, driven mainly by premium home appliances and OLED TVs as well as strong growth in vehicle components.
Moving forward, LG will continue to leverage its mobile expertise and develop mobility-related technologies such as 6G to help further strengthen competitiveness in other business areas. Core technologies developed during the two decades of LG’s mobile business operations will also be retained and applied to existing and future products.
The wind down of the mobile phone business is expected to be completed by July 31 although inventory of some existing models may still be available after that.
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