LG of South Korea becomes the first major smartphone brand to withdraw from the market

SEOUL (Reuters) – South Korea’s LG Electronics Inc. will cancel its mobile phone division at a loss after not finding a buyer, an action that will make it the first major smartphone brand to withdraw completely off the market.

Its decision to withdraw will leave its 10% share in North America, where it is the No. 3 brand, which will be wrapped up by Samsung Electronics and Apple Inc., with its national rival expected to take the lead. .

“In the United States, LG has targeted mid-priced (if not ultra-low) models and that means Samsung, which has more mid-priced product lines than Apple, will be able to attract more LG users.” , said Ko Eui- jove, an analyst at Hi Investment & Securities.

LG’s smartphone division has reported nearly six years of losses totaling $ 4.5 billion. Leaving the highly 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 to market itself with several innovations on mobile phones, including ultra wide angle cameras and, at its peak in 2013, was the third largest smartphone maker in the world behind of 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.

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 current 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.

Although rival Chinese brands such as Oppo, Vivo and Xiaomi do not have much presence in the United States, in part due to icy bilateral relations, their low- and mid-range product offerings from Samsung and Samsung will benefit from the absence of LG in Latin. America, analysts said.

LG’s smartphone division, the smallest of its five divisions, which accounts for about 7% of revenue, is expected to be liquidated 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.

Analysts said at a conference call they were told that LG plans to retain its basic 4G and 5G technology patents, as well as basic R&D personnel, and will continue to develop communication technologies for 6G. It has not yet decided whether to license this intellectual property in the future, they added.

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.

Shares of LG Elec have risen about 7% since the January announcement that it was considering all options for the business.