After nearly six successive loss-making years and a $5 billion commitment, LG may finally be ready to leave the smartphone business. The Korea Herald says that CEO Kwon Bong-seok, in a message to staffers, suggested that change was coming. A company official later told the paper that it was “about time for LG to make a cold judgment” about the ailing mobile division. Citing fierce competition in the handset market, the official that LG was looking at “sale, withdrawal and [a] downsizing of the smartphone business.”
Kwon, who assumed the top job at LG in early 2020, promised that the mobile division would be “profitable by 2021.” He didn’t explain how he was planning to turn around the slide, beyond launching new phones with “wow factors to woo consumers.” In the last year, however, the company has launched the Velvet (with a dual-screen case) and Wing, with its wacky flip-up display.
Naturally, LG has also been showing off its rollable phone, which was expected to debut at some point this year. That, however, is likely to sit in the ultra-premium tier, and may not be enough to reverse LG’s ever-dwindling market-share which StatCounter said had fallen to 1.7 percent in December 2020. That same month, LG announced that it would outsource the design and construction of its low-end phones to third-party ODM manufacturers.
In his message to employees, Kwon reportedly said that some of the the employees — potentially around 60 percent — would be re-assigned to other parts of LG’s business. It’s not clear if the other 40 percent will remain in the far smaller mobile arm or let go, although it’s likely that LG will need to retain some of that institutional knowledge. One of the reasons that Sony kept its mobile division running so long is to ensure it can leverage the technologies used in phones for any future frontier of gadgets.
In 2016, Engadget asked when LG would finally lose patience with its loss-making mobile division after it fell into a second, deep slump. The company had successfully managed to claw its way back to profitability after a loss-making 2013, but when it slipped again in 2015, never looked like recovering. After all, LG was unable to compete with (Korean rival) Samsung’s marketing might, or the low costs afforded by Chinese volume players like Huawei and BBK, parent company of Oppo, Vivo, OnePlus and Realme.
A representative for LG says that the company is “committed to doing what is in the best interest of the company and its mobile busines. That said, nothing has been finalized and any report to the contrary is pure speculation.”
Update Jan 20th, 6:30am: Article updated to clarify comments made by an LG representative to the Korea Herald. Added comment from an LG spokesperson about the story.