LG considers leaving the smartphone business in 2021
LG is mulling an exit from the fiercely competitive smartphone space. The soon-to-be-former smartphone maker is considering a 2021 exit strategy, after the phone business lost $4.5 billion over the last five years. This development all but confirmed through a company-wide email from LG CEO Kwon Bong-seok. The email euphemistically states that "all possibilities are open" for the future of the smartphone arm.
"LG Electronics has come to the point where it is time to make the best choice by calmly judging its current and future competitiveness in the mobile business. Currently, all possibilities are open and the direction of business operation is carefully reviewed."
The internal memo was primarily meant to address shutdown rumors doing the rounds in Korea. The memo assures employees that nothing has been finalized, and that the company is keeping options open to address "mobile business challenges" in 2021. Meanwhile, an LG official told The Korea Herald that the company is "considering all possible measures, including sale, withdrawal, and downsizing of the smartphone business".
The memo reportedly assured that around 60 percent of employees in the smartphone business will be assimilated into other LG arms. The fate of the remaining 40 percent is unclear. It's hard to say whether they will be let go or retained in a smaller mobile arm potentially focusing on flagships. Sony, for example, continued to retain its smartphone team primarily for R&D purposes.
Meanwhile, NewsPim reports that Vietnam's VinGroup is interested in LG's North American smartphone arm. The Vietnamese company owns the local VinSmart smartphone brand. This could potentially involve the sale of the company's R&D center, sales network, and production plant situated in Latin America. The move could give VinGroup access to the US market, where LG still holds a substantial 13 percent market share.
LG has been unable to claw back market share from rival Korean smartphone maker Samsung. The influx value focused Chinese brands such as Xiaomi and Realme further eroded LG's market share even in the price conscious smartphone segment. The company tried to wow the audiences with the Velvet and WING smartphones, but it turned out to be a case of too little too late.