LG Becomes First Major Smartphone Company to Withdraw from Market
The LG V30 smartphone (Wikimedia Commons).
South Korean tech multinational LG Electronics Inc. announced on April 5 that it would be shutting down its smartphone division indefinitely after failing to secure a buyer for its technologies. The company plans on completely winding down the division by July 31. It is slated to be the first major smartphone brand to completely withdraw from the market.
The decision follows a January 20 report of CEO Kwon Bong-Seok circulating an internal memo on possible changes to the company’s smartphone business. An LG official explained that at the time the company was considering “all possible measures, including sale, withdrawal, and downsizing of the smartphone business.”
For the past five years, LG has reported deficits totaling $4.5 billion in its smartphone segment, the smallest of its five divisions. The company had posted operating losses for 23 consecutive quarters, since the second quarter of 2015.
In the past, LG was among the first developers to release a number of cell phone innovations, including ultra-wide-angle cameras. At its peak in 2013, LG was the world’s third-largest smartphone manufacturer behind Samsung and Apple.
LG is still third in North America with a 13 percent market share behind Apple’s 39 percent and Samsung’s 30 percent as of the third quarter of 2020, according to Counterpoint Technology Market Research. But in recent years, its phones suffered from software and hardware mishaps, slower software updates, and a lack of expertise in marketing compared to Chinese rivals like Oppo, Xiaomi, and Huawei.
LG’s current global share is only about two percent. It shipped 23 million phones in 2020, compared to Apple’s 201 million and Samsung’s 256 million. LG’s North American share is now expected to be taken over by Samsung and Apple, with Samsung predicted to have the edge.
In South Korea, the division’s employees will be relocated to other LG Electronics businesses and affiliates, while elsewhere decisions on employment will be made at the local level.
For existing LG smartphone users, the company has promised to provide “service support and software updates” for a “period of time which will vary by region.” LG is still in the process of rolling out the 7-month-old Android 11 operating system on some of its smartphones. The company is currently planning on refocusing efforts towards its more lucrative “growth areas”—electric vehicle components, connected devices, smart homes, and 6G communication technologies.