LG Electronics announced on the 5th that it has confirmed the withdrawal of the smartphone business. With the cumulative deficit reaching a total of 5 trillion won, the company decided to withdraw from the business after not even selling it overseas. As a result, after 26 years of starting the mobile business with LG Information and Communication in 1995, LG mobile phones disappeared into the back of history.
LG Electronics held a temporary board meeting at its headquarters in Yeouido, Seoul this morning, and announced that it decided to end production and sales of the MC business division and withdraw from the mobile business on July 31st. Immediately after the announcement, LG Electronics released a press release and said, “LG Electronics has failed to produce results due to inadequate response, while the yanggang system in the premium mobile phone market has recently strengthened, and major competitors are focusing on the entry-level mobile phone market and price competition has intensified. He explained the reason for the withdrawal of the smartphone business.
LG Electronics plans to produce mobile phones by the end of May so that it can supply contracted products to telecommunications companies. It was also decided to continue the after-sale service. Compensation will be discussed for losses from suppliers. Employees of the MC business division are rearranged in consideration of the demands of other business divisions and LG affiliates. Apart from the end of the smartphone business, R&D on core mobile technologies such as 6G will continue. In the industry, it is interpreted that the withdrawal of the smartphone business is an extension of LG Chairman Kwang-mo Koo’s strategy of’selection and concentration’ that it is necessary to strive to foster future businesses. Accordingly, with the withdrawal of the smartphone business, LG Electronics’ business restructuring is expected to accelerate.
LG Electronics plans to expand future-oriented new businesses such as artificial intelligence (AI)-based home appliances and electronic equipment business, and business-to-business transactions (B2B) including robot business. An official at LG Electronics said, “Through selection and concentration, we will focus our capabilities on core businesses and accelerate the preparation of new businesses for future growth to improve the business structure.”
[노현 기자]
Apple and China’s 3rd general offensive offensive… K-phone crisis that only Samsung remains
Feature phone focus missed smartphone
Eventually, even LG Electronics ended the phone business.
Concerns about the collapse of the K-smartphone ecosystem
Samsung, the number one global share
Profits stop at one-fifth of Apple’s
China’s OVX also threatens to occupy double digits
![On the 5th, when LG Electronics decided to withdraw its smartphone business, an employee of an LG Electronics store in Seoul is looking at a smartphone on display. [한주형 기자]](https://i0.wp.com/file.mk.co.kr/meet/neds/2021/04/image_readmed_2021_325418_16176211674599662.jpg?w=560&ssl=1)
On the 5th, when LG Electronics decided to withdraw its smartphone business, an employee of an LG Electronics store in Seoul is looking at a smartphone on display. [한주형 기자]As LG Electronics closed its smartphone business and dismantled its mobile communication (MC) business headquarters,’K smart phone’ remained virtually alone with Samsung Electronics across large and small companies. Samsung Electronics is Apple’s only competitor in the premium smartphone market and ranks first in the global smartphone market. However, with Chinese smartphones hitting and rising, the sense of crisis in Samsung Electronics and Korea’s smartphone ecosystem is growing day by day.
The 26-year history of LG phones began with the’Hwatong’ mobile phone released in 1995. Subsequently, as wireless communication services were in full bloom, LG Electronics’ personal portable communication service (PCS) phone brand’Cyon (CION, later renamed CYON)’ appeared. LG Electronics was honored with numerous feature phone hits from CYON in the mid-2000s before the advent of smartphones, including chocolate phones and Prada phones. In the third quarter of 2010, global sales reached 28 million units, ranking third in the global mobile phone market after Nokia and Samsung Electronics.
Those glorious days were paradoxically poisoned to LG Electronics. This is because Apple’s Steve Jobs introduced the iPhone in 2007, and a smartphone cataclysm like never before arrived. Samsung Electronics drastically discarded the hit Anycall series to respond to the iPhone and survived the time of pain by switching to the Galaxy. LG Electronics was obsessed with the glory of feature phones.
LG Electronics released the first smartphone’Andro-1′ based on the Google Android operating system (OS) in 2009. Then, in 2010, it hit the market with the’Optimus’ series. However, the market was divided into Samsung Electronics for Android OS and Apple for iOS.
LG Electronics’ MC business division turned to the red in the second quarter of 2015 and recorded an operating loss of over 5 trillion won for 23 consecutive quarters until the end of last year. The MC division was unable to establish a consistent brand identity due to frequent strategic revisions. From 2015 to the present, four heads (Jun-ho Jo, Jeong-hwan Hwang, Bong-seok Kwon, Yeon-mo Lee) have been in office for an average of only one year.
Now, the status of Samsung Electronics, a K-smart phone that remains alone, cannot be transferred. According to the market research firm Strategy Analytics (SA), in the global smartphone market in February, Samsung Electronics sold 24 million units, ranking first with a 23.1% share. Apple ranked second with 23 million units (22.2% share). Following this, Xiaomi (X), Vivo (V), and Oppo (O), the three general companies of’OVX’ in China, are dividing the market in order of 11.5%, 10.6%, and 8.5%, respectively.
Samsung Electronics is struggling for first and second place with Apple, and the results in February of this year were the premium strategy smartphone Galaxy S21, which was released early, and the effect was great.
However, when looking at the global smartphone market based on last year’s profit share, Apple is 79.7% and Samsung Electronics is 15.7%, which is a big difference. It means that 80% of the money earned by smartphone makers around the world is monopolized by Apple.
As Samsung Electronics suffers a stagnation in the premium phone market, the sales portion of mid- to low-end smartphones is gradually increasing. Launched in April 2013, the Galaxy S4 sold 46 million units in the first year alone. However, for the Galaxy S21 series, the industry estimates sales of up to 25 million units this year.
The offensive of Chinese smartphone makers is increasing. Although Huawei is being shaken by US sanctions, the three OVXs are threatening Samsung Electronics by replacing Huawei in the global mid- and low-end smartphone market.
“LG Electronics’ global sales volume accounts for more than 80% in the North and South American market,” said Lim Soo-jung, a countpoint research researcher. “It is done” he said.
There are many prospects that the withdrawal of LG Electronics’ business, which had sold 20 million to 30 million smartphones per year, could lead to a contraction of the domestic smartphone ecosystem. For domestic parts and material partners, only Samsung Electronics has remained a large customer, but even Samsung is in a bad situation. Hwang Min-seong, a senior research fellow at Samsung Securities, said, “Samsung Electronics is also expected to see a decrease in smartphone sales from the second quarter due to unstable semiconductor supply and demand.” The domestic smartphone ecosystem has been through a really tough year,” he said.
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