LG Shutting Down Smartphone Business

LG Announces Exit from Mobile Phone Market

LG Electronics announced on Monday the discontinuation of its mobile phone business globally. This decision allows the company to redirect its focus and investments towards areas demonstrating greater potential for growth.

Strategic Shift to Emerging Technologies

The company will concentrate resources on sectors including electric vehicle components, connected devices, smart homes, robotics, artificial intelligence (AI), and business-to-business (B2B) solutions, as well as associated platforms and services.

Board Approval and Prior Review

LG’s board of directors formally approved this strategic shift today. This move follows a previously announced review of the smartphone division’s future, initiated in January.

Continued Support for Existing Customers

Despite ceasing production, LG will continue to sell existing smartphone inventory. Furthermore, the company commits to providing software updates and support for current smartphone models for a period dependent on the specific region.

The fate of employees within the mobile phone business will be determined on a local basis.

Failed Attempts at Revival

Earlier reports in January indicated LG’s exploration of a potential sale for its smartphone business. Simultaneously, plans for a rollable phone were unveiled, but ultimately, efforts to revitalize the division proved unsuccessful.

Leveraging Mobile Expertise for Future Innovation

LG intends to utilize its accumulated mobile expertise in the development of future mobility technologies, including 6G. Core technologies refined over two decades of mobile operations will be integrated into both existing and forthcoming products.

Persistent Financial Challenges

The financial underperformance of LG’s smartphone business has been widely recognized for several years. Like many other Android smartphone manufacturers, LG faced significant challenges in achieving profitability.

Intense Market Competition

LG primarily targeted the midrange and high-end smartphone segments. These areas have become increasingly competitive due to the emergence of Chinese smartphone brands like Huawei, Xiaomi, OnePlus, Oppo, and Vivo, which consistently offer compelling value propositions.

Limited Service Portfolio

Many smartphone companies now rely heavily on revenue generated from software services, such as mobile payments. While LG introduced a mobile payment service in 2017, following Samsung Pay’s launch, its range of associated services remained comparatively limited.

Regional Dependence and Vertical Integration

According to Neil Shah, a partner at Counterpoint, LG’s reliance on the Korean and North American markets proved detrimental. However, he also highlighted LG’s strength in vertical integration, comparing it to Samsung.

This integration encompasses LG Display (displays), LG Chem (batteries), LG Innotek (camera and IoT/auto modules), Silicon Works (semiconductors), and LG Electronics (consumer goods).