[사설] Dare to give up a business that doesn’t cost money… LG’s grim determination

LG Electronics has entered the procedure of rearranging the smartphone business, which has a cumulative deficit of 5 trillion won. In an e-mail sent to employees of the Mobile Communication (MC) division, Kwon Bong-seok, president of LG Electronics 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 mobile business Formulated. Various measures are being reviewed, such as sale, reduction of business units, and manufacturer development and production (ODM).

Meanwhile, the sale of LG Electronics’ smartphone division has been constantly erupting. This is because it has been in the red for 23 consecutive quarters since the second quarter of 2015. LG Electronics started the mobile phone business in 1995 and was successful, but it fell behind in competition as it entered the smartphone market. In the third quarter of last year, the global market share fell to 9th. The reason why the smartphone business could not be closed despite a chronic deficit is that smartphones will become a hub in the era of the Internet of Things (IoT) where home appliances and automobiles are connected. There was also an expectation that it would be possible to overturn the bout, but the market contracted due to the corona shock and reached its limit. However, it is also evaluated that Nokia and Motorola have survived in a disruptive market.

In the end, the decision to fold a smartphone, which is a’sick finger’, is a cold decision to boldly give up a business that does not have money. Instead, it is worth a positive evaluation in that it is a signal and a willingness to develop future growth engines. Since taking office in 2018, LG Group Chairman Kwang-mo Koo has focused on’digital transformation’ strategies such as artificial intelligence (AI), big data, and cloud through mergers and acquisitions along with the automotive electronics business, which is expected to give more strength.

After forcibly selling semiconductors with the government-led Big Deal in 1999, LG has grown the automotive battery business into a’second semiconductor’. In the end, you need choice and focus. The withdrawal of smartphones could also be a turning point for LG to grow its AI and electrical equipment sectors into future core businesses. The restructuring of domestic companies and industries is tightly blocked in many places due to the management’s anger and opposition from the labor world. We hope that LG Electronics’ grim restructuring will be a fresh stimulus.
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