After losing around $4.5 billion in its revenue over the past five years, LG is planning to exit from the competitive smartphone market in 2021. LG CEO Kwon Bong-Seok has notified internally in the company about the planning to make big changes in its smartphone business.
“Since the competition in the global market for mobile devices is getting fiercer, it is about time for LG to make a cold judgment and the best choice,” says an LG official in a statement to The Korea Herald. “The company is considering all possible measures, including sale, withdrawal, and downsizing of the smartphone business.” read a memo sent by CEO internally reported The Korea Herald.
Later, LG confirmed that the internal memo circulated was genuine and mentioned that nothing has been decided by the management yet. “LG Electronics management is committed to making whatever decision is necessary to resolve its mobile business challenges in 2021, As of today, nothing has been finalized.” said an LG spokesperson.
Rumors on the internet suggest that the company might be in plans to downsize or completely dismantle its mobile division. Rumors also tell that 60 percent of the staff would be moved and reassigned to other divisions in the company.
LG has been facing rumors issues for quite some time. In 2019 when the company decided to expand outsourcing low-end and midrange productions, rumors started to spread regarding the future of LG mobiles in local media.
CEO Kwon’s vow for 2021
CEO Kwon took office in January 2020 and vowed to increase the company’s smartphone business in 2021. “The company is improving the profitability of the smartphone business by slashing costs, and will seek growth in the premium market next year,” Kwon said at a ceremony to mark Electronics and IT Day in December.
In 2020’s third quarter, LG shipped nearly 6.5 million smartphones, a dip of 1 million smartphones in the same quarter in 2019, according to data available on Counterpoint. LG also ditched its smartphone brand G series and Kwon’s vow is nowhere near to reality as the company now controls just 2 percent of the smartphone market.
LG Rollable Display smartphone
During the company’s annual CSE event which was held virtual in 2021 audiences were teased with LG Rollable. The phone was seen clearly at the start of the conference and at the end, however, no details were given out about the mobile.
LG smartphones were supposed to be the hub of the company’s AI and IoT ecosystem. The idea to grow the system of connecting LG Television and LG home appliances now seem to head in the wrong direction.
Future of innovation
LG exiting the market is a clear concede to giants like Apple and Samsung and also abandoning important ambitions of the company while the dependence on mobile is increasing around the world.
If LG manages to bring products that fit in the competitive mobile market range, it would be good for the whole smartphone industry. If they try to adapt to medium-range mobiles and focus on producing them more, it will help them increase sales. However, if the company stops this, the market will lose one of the biggest mobile innovators.