LG Electronics President Kwon Bong-seok virtually admitted to the withdrawal of the LG Electronics smartphone business. President Kwon said through an e-mail to the members of the headquarters regarding the business operation of the MC business division on the 20th, “We believe that we have reached the point where we must make the best choice by calmly judging the current and future competitiveness related to the mobile business.” The possibility is open and under review.” The photo shows the LG Twin Tower in Yeouido, Seoul this afternoon. Photo = News 1
The possibility of withdrawal of the smartphone business, which LG Electronics had been embracing with’sick fingers’, has been formalized. It is from self-diagnosis that it has reached its limit to handle the deficit that has continued for over five years. With this, LG Electronics, which entered the mobile phone market in 1995, is doomed to quit its core business after 20 years.
“Review of all possibilities such as sale of mobile business”
In an email sent to executives and employees of the MC division focused on the smartphone business on the 20th, Kwon Bong-seok, president of LG Electronics, said, “No matter how the MC division’s business operation direction is determined, in principle, the employment of members will be maintained. “No.” Regarding the’sold out of the smartphone business’ recently raised in the market, he said, “We are currently examining the direction of business operation with all possibilities open.” Although the rumors of withdrawal from LG Electronics’ smartphone business, which has been struggling with a deficit, have been raised steadily, this is the first time that the top management directly mentioned.
President Kwon also specifically mentioned the current status of the MC business headquarters. President Kwon said, “The MC division has continued its operating loss for 23 consecutive quarters since the second quarter of 2015, and as of the end of last year, the cumulative operating deficit reached 5 trillion won.” If the decision on the operation of the MC division is delayed, it is interpreted that the loss will inevitably increase.
President Kwon said, “In the global market, the competition of mobile business including smartphones is getting fiercer.” “LG Electronics has reached the point of making the best choice by calmly judging its current and future competitiveness in the mobile business. He also reaffirmed the current position of the MC business headquarters in the global market.
LG Electronics’ 2015 ‘3D game phone’ photo = Yonhap News
10% of MC headquarters are retired
LG Electronics was wary of expanding interpretation, saying, “Nothing has been decided” for Kwon’s announcement. However, in the market, it is interpreted as the perspective that LG Electronics has actually entered the procedure of’withdrawal of the smartphone business’. As a result of this report, it is known that LG Group also considered a plan to’withdraw the mobile phone business’ earlier this month. As part of this, it is reported that all existing mobile phone development has been stopped, as well as personnel reorganization accordingly. Only 30% of the research manpower is left, the remaining 60% is in the form of conversion and 10% of the retirement plan.
Visuals_LG Electronics Annual Operating Profit
The reason LG Electronics has taken this special measure is because there is a lot of uncertainty about the future of the smartphone business. In the mid-2000s, LG Electronics climbed to the 3rd place in the world’s mobile phone market with a’feature phone’ at an entry-level price point, winning and winning. However, LG Electronics, which had been drunk on the feature phone box office, started to crash as it responded belatedly to the smartphone era that began in 2009. While Apple’s iPhone is making a blast around the world and Samsung Electronics urgently prepares for the Galaxy S series, LG Electronics lags behind as a latecomer, eventually being completely pushed out of the mainstream smartphone market.
Afterwards, he took off his feet to restore his reputation, but the white medicine was invalid. In order to reduce costs in 2019, the smartphone production line in Pyeongtaek, Gyeonggi Province, was moved to Vietnam, and in the last 10 years, it has accelerated the restructuring of manpower. During this period, the number of employees at the MC headquarters decreased by 60% from 9,467 to 3,724. It is estimated that the MC headquarters posted an operating loss of nearly 800 billion won last year. This year and next year as well, the operating deficit is narrowing, but the deficit is predicted by default.
LG puts money out of business and focuses on AI
In the business world, it is expected that in the future, LG Electronics will focus on expanding the business of electric devices (electronic devices), artificial intelligence (AI), and robots instead of the smartphone business, which is in a stagnant growth. In the same vein, LG Electronics announced last month that it will establish a’electric vehicle parts joint venture’ with Magna of Canada, the world’s third largest auto parts maker. An official in the electronics industry interpreted, “With LG Electronics, it is desperate to grow food for the future, but in the end, it means that we will end the business that does not cost money and use that money to invest in future food businesses such as electric vehicles, electric vehicles, and robots.”
LG Magna E-Powertrain photo = LG Electronics
In the market, LG Electronics is welcoming this announcement. LG Electronics’ share price surged 12.8% from the previous day to the 52-week high on the news that it could sell its mobile business. An analyst at a securities company said, “We have endured on the grounds that smart phone technology can help the group, but that has been an obstacle to LG Electronics’ future growth,” he said. “I think the corporate value will increase significantly.”
Kim Dong-wook reporter [email protected]
Hyunwoo Kim reporter [email protected]
News directly edited by the Hankook Ilbo can also be viewed on Naver.
