Seoul/New Delhi: LG Electronics mentioned on Monday that it’ll withdraw from the mobile business after years of money-losing efficiency amid intensifying competitors with larger rivals.
The South Korean tech powerhouse mentioned in a regulatory submitting that its mobile communications (MC) unit will not produce and promote handsets after July 31, citing its lengthy droop and fierce competitors within the trade.
The choice got here two months after the corporate mentioned its MC division is open to “all possibilities” for its future operations.
LG’s mobile business has been within the pink for the reason that second quarter of 2015. Its gathered working losses reached 5 trillion gained (US$4.4 billion) final 12 months.
LG, as soon as the world’s third-largest handset maker, reportedly had talks with Vingroup of Vietnam and Volkswagen of Germany to promote the mobile business, however the talks fell by, in keeping with trade insiders.
LG mentioned its exit from the mobile business will result in a decline in income for the corporate within the brief time period however will finally enhance its monetary standing and administration effectivity within the longer interval, studies Yonhap information company.
Analysts mentioned that LG’s working revenue might go up by 1 trillion gained this 12 months if it withdraws from the loss-making mobile business.
LG has been striving to make a turnaround in its mobile business lately, shifting its smartphone manufacturing base to Vietnam whereas increasing outsourcing offers.
To increase its premium smartphone gross sales, LG final 12 months launched the Explorer Project, its new mobile class highlighted by a unique type issue.
Under the undertaking, the corporate launched the Wing, a dual-screen smartphone with a rotating type issue, however its gross sales had been apparently disappointing.
This 12 months, LG was scheduled to launch a smartphone with a rollable OLED show after it teased the product on the Consumer Electronics Show (CES) 2021. However, the corporate reportedly scrapped the plan.
Analysts mentioned LG’s efforts weren’t sufficient to show the desk as the corporate was overshadowed by Samsung Electronics Co. and Apple Inc. within the premium phase, whereas Chinese manufacturers dominated the funds cellphone sector.
“Its strategic smartphone models like the Velvet and the Wing performed poorly and with the 5G momentum passing its peak, the company has lost ground in the premium smartphone market with little cards left to play,” mentioned Koh Jung-woo, an analyst at NH Investment & Securities.
“Its rollable smartphone brought attention at CES and is enough to boost its technology prowess, but it is not likely to lead to meaningful sales.”
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According to market researcher Counterpoint Research, LG was the world’s ninth-largest smartphone vendor with a market share of two % after delivery 24.7 million smartphones final 12 months, down 13 % from a 12 months earlier.
