LG becomes the first major smartphone brand to withdraw from the market

SEOUL (Reuters) – South Korea’s LG Electronics Inc said on Monday it would end its loss-making mobile division, a move that will make it the first major smartphone brand to completely withdraw from the market .

Its decision to withdraw will leave its 10% share in North America, where it is the No. 3 brand, which will be swallowed up by smartphone titans Apple Inc and Samsung Electronics.

The division has recorded nearly six years of losses totaling about $ 4.5 billion, and leaving such a competitive sector would allow LG to focus on growth areas such as electric vehicle components, connected devices and smart homes. , according to a statement.

In better times, LG began marketing with several mobile phone innovations, including ultra wide-angle cameras, and was once in 2013 the third largest smartphone maker in the world behind Samsung and Apple.

But later, its flagship models suffered both software and hardware setbacks that, combined with slower software upgrades, kept the brand in constant favor. Analysts have also criticized the company for its lack of marketing experience compared to Chinese rivals.

Currently, its overall share is only 2%. Last year it shipped 23 million phones, which compares to 256 million for Samsung, according to research provider Counterpoint.

In addition to North America, it has a considerable presence in Latin America, where it ranks as the number 5 brand.

“In South America, Samsung and Chinese companies like Oppo, Vivo and Xiaomi are expected to benefit in the low- to mid-range segment,” said Park Sung-soon, an analyst at Cape Investment & Securities.

While other well-known mobile phone brands like Nokia, HTC and Blackberry have also fallen from the heights, they have not yet completely disappeared.

LG’s smartphone division, the smallest of its five divisions, which accounts for about 7% of revenue, is expected to end on July 31st.

In South Korea, division employees will be relocated to other LG Electronics companies and subsidiaries, while elsewhere employment decisions will be made locally.

LG will provide service support and software updates for customers of existing mobile products over a period of time that will vary by region, he added.

Talks to sell part of the business to Vietnam’s Vingroup fell due to differences over terms, sources with knowledge of the issue have reported.