​LG phone, today’s’Day of Destiny’…will disappear into the back of history

LG Electronics’ mobile communication (MC) business headquarters, which once led the era of luxury feature phones, such as’Prada Phone’ and’Chocolate Phone’, met its fateful day. It was pushed out of the competition in the premium smartphone market such as Samsung Galaxy and Apple iPhone, and eventually entered the procedure of’withdrawal’.

According to related industries on the 4th, LG Electronics will hold a board of directors on the 5th and decide on future operation plans and other matters of the MC business headquarters. Initially, LG Electronics attempted to sell the MC business headquarters, but it is known that the board of directors will discuss it with the direction of withdrawal as no suitable taker has appeared for three months.

Earlier, LG Electronics officially announced the possibility of withdrawal of the smartphone business in January through an email sent by CEO Kwon Bong-seok, CEO of LG Electronics, to employees. Representative Kwon emphasized that, while keeping all possibilities open (such as separate sale or significant reduction of business), he reviewed the direction of business operation, but emphasized that he would retain the employment of its members no matter how the operation direction of the MC division was determined.

However, in the end, the market is accepting’business withdrawal’ as a fixed fact. This is because there is no room to deal with the deficit that has continued. In fact, in an audit report released by LG Electronics at the beginning of last month, he said, “We made great efforts to improve the smartphone business structure, such as launching innovative products, but we did not achieve meaningful sales expansion and profitability improvement.” The management acknowledged that there is no other solution than withdrawal of the business, which can sustain the deficit for 23 consecutive quarters from the second quarter of 2015 to last year and to cover the cumulative operating loss of 5 trillion won.

In particular, the sale of LG Electronics has not produced tangible results. Although he had contact with various acquirers such as Vietnam’s Vingroup and Russia’s sovereign wealth fund, it ended in vain. An official in the industry said, “It seems that the acquisition and merger were not successful in the end, but the acquisition and merger were very different from the beginning.” He said.

The biggest challenge with the withdrawal of the MC business headquarters is the relocation of the existing workforce. Immediately after the board of directors, starting on the 6th, the MC division’s employees will receive support from affiliates or other business divisions who want to move.

It is known that the R&D personnel will be reassigned to △Vehicle (VS) business headquarters within LG Electronics, △ Department under the Chief Technology Officer (CTO), △ LG Energy Solutions, △LG Mag and E-Powertrain. Office workers are expected to be distributed evenly in home entertainment (HE) and home appliance (HA) along with these four locations. However, it is known that the software (SW) specialist will remain for the maintenance and repair of smartphones already sold by LG Electronics and software upgrades.

An industry insider said, “LG ​​Electronics introduced velvet and wing last year to swear in the smartphone market, but it was turned away from the market. It also showed a rollable at CES this year, but development has also been stopped. As the chairman took off, the LG phone has now disappeared into the back of history.”