LG Electronics calls the mobile phone business “incredibly competitive” and the move will allow it to focus resources in growth areas such as electric vehicle components, connected devices, smart homes, robotics, artificial intelligence and business-to-business solutions, as well as platforms and services, says the board of directors.
There had been suggestions that the LG Mobile Communications Company could be sold to its manufacturer, VinGroup in Vietnam, which makes the phones for LG as an Original Design Manufacturer (ODM). VinGroup is the third largest phone maker in Vietnam after Samsung and Oppo.
It says it has been squeezed out by Apple and Samsung, and was the seventh largest phone maker. The subsidiary had revenues of KRW 5.22 trillion ($4.66bn) in 2020 with a loss of KRW 841.20 billion ($750.63bn). Sales were also 9.2 percent down during the key Christmas quarter as a result of shortages of 4G chipsets and sluggish sales of premium smartphones in overseas markets. The company had also been spending more on marketing to try to boost sales of its flagship devices.
Overall, the LG Electronics group had turnover of KRW 63.26tn ($56.45bn) and operating profit of KRW 3.20 trillion ($2.85bn), an increase of 31.1 percent over 2019, driven mainly by premium home appliances and OLED TVs as well as strong growth in vehicle component solutions. The mobile division
The company says it will use the core technologies developed during the two decades of its mobile business operations for existing and future products. This will include wireless for the Internet of Things (IoT) as well the development of 6G technologies.
LG Electronics says it will provide service support and software updates for customers of existing mobile products for a period of time which will vary by region. 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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