LG exits the smartphone business after several years of losses

LG announced this Monday the closure of its smartphone division. The decision, approved by the company’s Board of Directors, marks the end of one of the most popular mobile phone manufacturers in the sector, especially during the years before the rise of Chinese brands such as Xiaomi, Huawei or Oppo. The effective closing date is scheduled for July 31 of this year.

“This move will allow LG to dedicate more resources to other growth areas, such as vehicle components, connected devices, smart homes, robotics, artificial intelligence and B2B solutions and services,” the brand said in a statement.

Following this announcement, LG will not launch new models to the market, but it will support all those smartphones that it has sold over the last few years. This includes replacement parts, software updates, etc. The brand has also indicated that, for an indeterminate period of time, some of the firm’s most recent models can be purchased – until their stock runs out.

Despite his departure from the sector, LG ensures that they will continue to develop technologies related to it. These include 6G, the connectivity standard that will replace 5G in a few years.

LG’s telephony division was adrift

LG Rollable PhoneLG Rollable

In January, Kwon Bong-Seok, CEO of LG Electronics, acknowledged in an internal statement that the time had come to make a decision on the mobile phone division. In this text, the executive also revealed that the company would evaluate various avenues, including the “sale, withdrawal or downsizing of the smartphone business.”

The telephony division had registered, in the last six years, losses of nearly $ 4.5 billion. Its market position, on the other hand, was not encouraging either. According to data from Counterpoint Research, LG distributed 24.7 million phones during 2020 – 13% less than in 2019 – which translated into approximately 2% market share. These figures contrast with those of its compatriot Samsung, which distributed 255.7 million smartphones during 2020.

LG has been one of the most recognized brands in the mobile telephony sector. In the era of feature phones, it made its way into the top five most popular manufacturers in the world. It was also one of the first companies to bet on Android, the operating system that now dominates the industry.

Its maximum splendor in the era of smartphones came from the hand of the LG G2, a mobile highly acclaimed by experts that also performed well in sales. This success, unfortunately, was never repeated. In the years that followed, the brand tried to differentiate itself with products such as the LG G5 or, more recently, the LG Wing, but neither of them succeeded. In parallel, brands such as Xiaomi, Huawei and Oppo have experienced significant growth thanks to their aggressive strategy, which has made LG’s path even more difficult.