[단독]LG Electronics, meeting the board of directors on the 5th of next month, decides the fate of the MC business division (total)

[이데일리 장영은] Is expected to hold a board meeting on the 5th of next month and make an important decision to determine the fate of the smartphone business. It has been two and a half months since LG Electronics president Kwon Bong-seok officially reviewed the withdrawal of the smartphone business through an email sent to executives and employees on January 20th.

LG Electronics meets the board of directors on April 5 and decides the fate of the MC business headquarters. (Photo = LG Electronics, Graphic = Reporter Lee Dong-hoon Lee)

LG Electronics’ MC Business Headquarters Withdrawal of Business… Decision on April 5

According to industry sources on the 18th, LG Electronics will convene the board of directors on the 5th of next month to make important decisions regarding the business operation direction of the Mobile Communication (MC) business headquarters. An official from LG Electronics said, “There are no issues that have been decided yet” regarding the schedule of the board meeting.

It is known that the current most influential plan is to internalize mobile-related technologies and patents, and to separate and sell overseas production plants. If the sale of the production plant is not feasible, LG Electronics is also considering a plan to use it internally and complete voluntary withdrawal.

A securities industry official said, “It is correct to believe that there was no business maintenance as an option from the time LG Electronics announced its business direction review.” did.

Initially, foreign companies such as Vietnam’s Bean Group, Google, Facebook, and Volkswagen were mentioned as targets for the sale of the MC division, but it was reported that there was no progress in negotiations. An IB industry official pointed out, “These companies were interested in technology patents related to communication and mobile technology held by LG Electronics and human resources for development and design, but LG Electronics did not intend to surrender core technologies and manpower without selling them.

There is an opinion inside and outside the industry that it is not bad to choose a complete voluntary withdrawal. An industry insider said, “The smartphone factory itself is not an attractive sale. If the production plant can be used on its own, it can be better than passing it over at a bargain price.”

In fact, Google withdrew from the smartphone market and returned again after three years, and Microsoft (MS) is evaluated to have actually entered the smartphone market again with’Surface Duo’, which was introduced at the end of last year.

[이데일리 이영훈 기자]It is known that LG Electronics has caught up with the withdrawal of the smartphone business. It seems that last year’s strategic phones, Velvet and Wing, were ignored in the market one after another, and it seemed to have been a big hit.

Cut off the 5 trillion deficit’sick finger’… Manpower relocation procedure

LG Electronics’ MC business division has been in the red for 23 consecutive quarters from the second quarter of 2015 to last year. The cumulative operating deficit is 5 trillion won. Despite such a sluggish business, LG Electronics has been drawing lines on business reductions and withdrawals that are raised every time until last year. In order to save the smartphone business, △resource operation efficiency, △relocation of production bases, and △innovative product launch efforts were also continued.

It is only recently that the attitude of LG Electronics’ leadership has changed. In an e-mail sent to executives and employees on January 20, President Kwon Bong-seok said, “We believe that we have reached the point where we must make the best choice by calmly judging the current and future competitiveness of the mobile business.” We are carefully reviewing the direction of business operation.” It seems that the failure of’Velvet’ and’Wing’, which was ambitious after reorganizing the smartphone lineup last year, was decisive.

It is reported that LG Electronics will begin the procedure for reassignment of 3,700 employees of the MC business division from the 6th after the board of directors decided on a plan to withdraw the mobile business on April 5th. Employees are expected to receive a public offering for their affiliations or other business headquarters who wish to move. It is said that there is a high demand for technical manpower in LG Electronics’ electrical equipment (VS) business headquarters and LG Energy Solutions, which is in charge of the battery business of LG Group.

The number of employees in the MC business division decreased from 5,000 in 2017 to about 3,700 as of the end of last year. President Kwon Bong-Seok previously emphasized, “No matter how the MC division’s business operation direction is determined, in principle, the employment of employees will be maintained, so there is no need to be anxious.” First of all, the wishes of the employees will be reflected as much as possible, but manpower will be rearranged in consideration of the demand for manpower required within the group.

Meanwhile, as LG Electronics withdraws from the smartphone business, attention is also drawn to the launch of the innovative form factor’LG Rollable’. LG Electronics unveiled the model name and prototype of LG Rollable through video at the world’s largest home appliance exhibition’CES 2021′ in January. Initially, it was reported that it would be released in the first quarter of this year, but recently, there is a story that it started producing prototypes to make products in limited quantities and pay them only to internal employees.

(Photo = Counterpoint Research)