LG Electronics Inc., the South Korean multinational electronics company said on Monday that it will shut down its loss-making smartphone division.
The company is expected to be completely shut down by July 31st this year. It is the very first big smartphone brand which is completely withdrawing from the market.
LG’s mobile division has been continuously reporting losses since last 6 years and the division registered a loss of totalling around $4.5bn (roughly Rs. 33,010 crore). The smartphone makers struggled most during the pandemic. The sales went down about 10% in 2020 mainly due to lockdowns.
In North America it is the world’s third-largest smartphone manufacturer behind Samsung and Apple. Its decision to shut out will leave its 10 percent share in North America.
“LG’s strategic decision to exit the incredibly competitive mobile phone sector will enable the company to focus resources in growth areas such as electric vehicle components, connected devices, smart homes, robotics and artificial intelligence,” it said in a statement.
They also said that the mobile phone market had become “incredibly competitive”.
Currently its global mobile phone market share is about 2%. As of last year it shipped 23 million phones where as Samsung shipped 256 million.
Out of the 5 divisions of LG, the smartphone business is the smallest, accounting for just 7.4% of revenue.
Moving forward, LG will continue to leverage its mobile expertise and develop mobility-related technologies such as 6G to help further strengthen competitiveness in other business areas,” a spokesman added.
The statement further states, “Current LG phone inventory will continue to be available for sale. LG will provide service support and software updates for customers of existing mobile products for a period of time which will vary by region. LG will work collaboratively with suppliers and business partners throughout the closure of the mobile phone business. Details related to employment will be determined at the local level”.
The statement also mentions that core technologies developed during the two decades of LG’s mobile business operations will also be retained and applied to existing and future products. It has also been revealed in the public statement by LG that inventory of some existing models may still be available after July 31st, 2021 after the company’s mobile phone business winds down.
LG will provide service support and software updates for customers of existing mobile products for a period of time which will vary by region, it added.
It is being said that they might sell part of the business to Vietnam’s Vingroup fell through due to differences about terms, sources with knowledge of the matter have said.
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