Poor support for sale negotiations, weighing on’business division closure’
LG Electronics is expected to hold the board of directors on April 5 and begin the procedure for organizing the smartphone business.
According to the industry on the 4th, LG Electronics plans to hold a board of directors meeting on the morning of the 5th, the next day, and finalize and announce the business plan of the MC division in charge of the smartphone business.
It has been about two and a half months since it began a full review of the smartphone business earlier this year. Earlier, on January 20, LG Electronics CEO Kwon Bong-seok said to executives and staff members that “we are carefully reviewing the direction of business operation, keeping all possibilities open.”
LG Electronics’ such move is because it has made smartphones an essential industry for the future, but has continued to lose money. LG Electronics’ MC division recorded an operating loss for 23 consecutive quarters since the second quarter of 2015. During this period, the cumulative deficit exceeded 5 trillion won.
In the industry, LG Electronics predicts that it will take a turn from the sale of the MC division and organize itself. It is known that LG Electronics has been negotiating with various global companies such as Vietnam’s Bean Group and Germany’s Volkswagen, but it has not been able to narrow the disagreement.
In particular, the negotiators showed great interest in LG Electronics’ mobile patents, while LG Electronics did not put them on sale, so it was reported that there was a large difference in position. According to a recent 5G standard patent survey conducted by German patent research institute IPlytics, LG Electronics ranked third in the global market (about 3700 cases).
LG Electronics said in a performance announcement conference call held in January, “The core mobile technology of the MC division is an important asset in the smart home appliance and automotive electronics business as well as terminals. We are reviewing the plan,” he said.
When the withdrawal of the project is confirmed, 3,700 employees of the MC division will be relocated. CEO Kwon said through an in-house e-mail earlier this year that’employees will be retained no matter how the operation plan of the MC business headquarters is determined.’
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