It is now official: the South Korean manufacturer is liquidating its mobile division after the failure of negotiations for its sale. If the manufacturer was no longer very present in Europe and had even removed its French branch for several years, it still ranked in the top 3 smartphones for two key markets: the United States and South Korea, where networks 5G were rolled out, and were seen as prime markets for years to come.
The closure of the Korean giant’s smartphone division can be explained in large part by its poor results recorded in recent years. The company has in fact accumulated approximately $ 3.9 billion in operating losses over the past five and a half years. Over six years, the Asian giant would even have suffered $ 4.5 billion in losses, which had recently launched negotiations to sell its smartphone branch to Volkswagen AG as well as to the Vietnamese giant Vingroup JSC, without success.
Pulling out of this fiercely competitive industry would allow LG to focus on growth areas such as electric vehicle components, connected devices and smart homes, group management said in a statement.
Towards 6G and beyond?
In better times LG had been early in the market with a number of cell phone innovations including ultra wide angle cameras. At its peak in 2013, it was the third largest smartphone maker in the world, behind Samsung and Apple. Today, LG’s market share is only around 2%, far behind behemoths like Samsung, Apple or Huawei.
The tech giant shipped “only” 23 million phones last year, compared to Samsung’s 256 million, according to Counterpoint. In addition to North America, LG has a significant presence in Latin America, where it is the fifth best-selling brand. LG’s smartphone division, the smallest of the five, which accounts for around 7% of its revenue, is expected to be liquidated by July 31.
LG’s market share is expected to quickly be swallowed up by the Korean giant’s rivals in the US market, namely Samsung and Apple. Note that LG’s disappearance from the smartphone market does not mean that the firm will no longer be present in the telecommunications market. LG’s management would like to keep its core 4G and 5G technology patents as well as its core R&D staff, and even want to continue developing technologies for the future 6G.