Technology

LG withdraws from smartphone market after six years of financial loss

LG is throwing in the towel. The Korean manufacturer, which for a time was one of the major smartphone manufacturers, is officially withdrawing from the market and closing its mobile division. This announcement, which was made on April 5, comes as no surprise. Rumors have been circulating about it for months, as it marks the end of six years of decline marked by uninterrupted financial losses.

The production and sale of smartphones will stop on July 31. The “rollable” phone presented in January at CES will not be marketed. These resources will be reallocated to growing business sectors, including the manufacture of components for electric vehicles, smart homes and robotics. LG will also continue to work on technologies related to smartphones, including network and cameras.

LG only had a 2% market share

The LG group will only be moderately impacted by this closure, smartphones representing only 8.2% of Korean revenues in 2020. Especially since the losses related to this division amount to 3.743 billion euros over the past five years. years, when he had invested $ 5 billion.

LG now only has a 2% global market share. According to Counterpoint, the company distributed 23 million smartphones last year, 10 times less than Samsung, which has 256 million. LG’s sales are mainly concentrated in the United States, its historic stronghold. It is still number three in the market with 10% of sales in 2020, a piece of the pie that Samsung and Apple will be happy to devour.

Innovations and failures

LG’s history in mobile phones could be summed up in two words: challenger and innovator. The company entered the market in 2002 when it was dominated by Nokia. She manages to find a place in the shadow of the Finnish giant or Motorola and its Razr. In 2007, it was the first to launch a phone equipped with a large touch screen: the LG Prada. A product completely eclipsed by the iPhone, released shortly after.

LG will never succeed in coming to the fore, especially against its national rival Samsung. The launch of new products resolutely turned towards innovation, such as the G5 (modular), the Velvet or the Wing (two screens), will not have enabled the company to reverse the trend. To limit losses, it began two years ago to outsource the production of its entry and mid-range models.

LG is not the first manufacturer of smartphones to fall in the battalion. The fierce competition in the market, especially from Chinese manufacturers, has led Sony to stop the fees, while HTC or Motorola have only a symbolic presence there. Severely affected by the American embargoes targeting it, Huawei can no longer hope to become the world’s largest manufacturer, and the leading duo on a global scale remains Apple and Samsung.

Julien bergounhoux

@JBergounhoux


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