The LG Group started the mobile phone business in 1995 when LG Information & Communication launched’Hwa Tong’. LG Electronics’ MC Business Division was born in 2000 when LG Information and Communication was absorbed by LG Electronics. At one time,’Chocolate Phone’,’Shine Phone’, and’Prada Phone’ became very popular, winning success. However, when the strategic smartphone’G5′, which was introduced in 2016, failed, it started to make a trillion-unit deficit.
Exiting the LG Electronics smartphone business
Selling is limited even though the rollable phone is popular
Smartphone core to home appliance and mobility
Observation of ODM expansion compared to sale and withdrawal
President Bong-Seok Kwon “The time to judge competitiveness
Keep hiring, you don’t have to worry.”
According to the market research firm Strategic Analyst (SA), LG smartphones sold 8 million units worldwide and 2.2% market share in the third quarter of last year. It ranks ninth in the world, less than China’s Oppo and Vivo. Last year, they released’Velvet’ and’Wing’, but failed to rebound. As a self-rescue, the production line in Pyeongtaek, Gyeonggi-do, was moved to Haiphong, Vietnam, and the head of the division was replaced four times over the past six years.
LG smartphone sales and operating profit. Graphic = Reporter Kim Kyung-jin [email protected]
At the’Consumer Electronics Show (CES) 2021′, the world’s largest home appliance and information technology (IT) exhibition, the’Rollable Phone’ video was shown in the form of rolling up the screen and received favorable reviews. It is estimated to be 500,000 units.
In the mobile industry, there has been an endless rumor for LG Electronics to sell and withdraw its smartphone business. In 2015, rumors spread that “Google is taking over the LG smartphone business unit,” causing trouble. At this time, LG Electronics has denied that it is “unworked”.
At the beginning of this year, the rumors about the sale broke out among internal members as LG Electronics undertook restructuring to reduce the role of the MC division. LG Electronics reorganized its business structure in the direction of improving the cost structure, such as significantly reducing research manpower and establishing a new manufacturer development and production (ODM) business manager. However, this time, through a message from LG Electronics CEO Kwon Bong-seok, it officially announced the sale and withdrawal.
Share price of LG Electronics on the 20th
It seems that the intention of LG CEO Koo Kwang-mo was reflected after the review of the sale. After taking office in 2018, CEO Koo has actively promoted new business. Last year, LG Electronics established a joint venture’LG Magna’ with Magna, the world’s third largest auto parts maker. Instead, it drastically arranged deficit businesses such as liquid crystal display (LCD). A business official said, “According to (Chairman Koo’s) strategic decision to reorganize the business centering on future businesses such as artificial intelligence (AI) and robots, it can be interpreted as being confused in the direction of somehow making the smartphone business more efficient.” .
The number of executives and staff members of the MC headquarters, which once exceeded 5,000, is currently around 3,700. President Kwon Bong-seok emphasized that “no matter how the business operation direction is determined, in principle, employees are retained, so there is no need to be anxious.” An official from LG Electronics said, “The late Chairman Koo Bon-moo declared that’there is no restructuring of manpower’ even in the face of the financial crisis, and actually did that.’
It is not easy for LG Electronics to completely abandon the MC business. In the future, when home appliances and mobility are connected based on 5G (5G) communication and Internet of Things (IoT), smartphones will play a key function. In the end, it is observed that the company will aim to improve performance by expanding ODM rather than selling or withdrawing the MC business. Or, after selling the business unit to non-smart phone operators such as platforms and automobiles, a plan to connect with the smartphone business through strategic alliances will be discussed.
Noh Geun-chang, head of Hyundai Motor Securities Research Center, analyzed, “Even if the business is sold, smartphones should serve as a’home appliance hub’, so I don’t think they will completely rule out.
On this day, LG Electronics’ stock price ended at 167,000 won, up 12.84% (19,000 won) from the previous day. The highest price ever, the market capitalization increased to 27,329.2 billion won.
Reporters Park Hyung-soo, Kim Gyeong-jin, and Kwon Yu-jin [email protected]