LG-Electronics-to-exit-mobile-phone-biz
LG Electronics CEO Kwon Bong-seok speaks during an event in 2019. Back then, he proactively promoted its mobile phones, but the firm decided to fully exit the business due to snowballing losses. Photo courtesy of LG Electronics

Korean tech giant will focus on AI and EV parts

The world’s handset producers compete to fold their smartphones. In comparison, Korea’s LG Electronics is set to fold its mobile phone business due to mounting losses.

The Seoul-based firm said this week that its board members opted to fully exit the smartphone business as of July 31 because its accumulated deficits have topped $4 billion since 2015.

“In order to focus on business sectors where we can offer new experience and values to our customers, we decided to terminate the mobile phone business,” LG said.

Instead, the tech giant is expected to concentrate on such potential-rich areas as AI and EV components.

It would sell phone inventory for the time being and keep providing services and support. The details would be different at the respective market.

In the mid-2000s, LG was a mobile phone powerhouse. In the feature phone market, its rivalry with Samsung Electronics was neck and neck in many countries across the world.

In particular, the global sales of its mega-hit slider phone, nicknamed Chocolate, surpassed 20 million in 2005 and 2006.

Yet, LG was late in developing smartphones after Apple iPhones came to market in the late 2000s. Since then, its cell phone business has struggled to stay alive.

Widely expected

Early this year, LG CEO Kwon Bong-seok told employees that the company should do something about the handset division.

Back then, observers projected that LG would sell the money-losing business to such potential buyers as Facebook, Google, or Volkswagen. Still, it is the No. 3 player in North America.

However, it decided not to dispose of its mobile business, and Kiwoom Securities analyst Kim Ji-san said that the measure has something to do with its patents.

“LG has approximately 24,000 patents related to fourth- and fifth-generation telecom. In my view, their values would be considerable,” Kim said.

“After securing source technologies about sixth-generation telecom, it will take advantage of them for AI, robots, IoT, and connected cars.”

By contrast, DB Financial Investment analyst Kwon Sung-ryul said that it scraps the mobile division to show its strong will of restructuring its business portfolio.

“LG made the right decision because its handset division is unlikely to find ways to turn around,” he said.

LG was initially scheduled to introduce rollable phones during the first half of this year, but the plan would also be jettisoned.

CJ-CheilJedang-Banner-Ads