LG phone withdrawal from’Samsung’ What is the price of a smartphone? “To Samsung’s hilt”

Input 2021.04.06 11:39

LG Electronics withdrew its business, which used to occupy 10% in Korea
Samsung Electronics, 70~80% market monopoly forecast
The introduction of the’separate disclosure system’, which tried to lower the terminal value, is also difficult.
“It is necessary to induce competition with foreign phones and activate the self-sufficiency system”

Samsung Electronics (005930), Apple, LG Electronics (066570)The domestic smartphone market, which is dominated by three locations, will be reorganized into the second power due to the withdrawal of LG Electronics’ smartphone business. Considering the fact that Apple’s market share is about 20%, it is actually a monopoly system of Samsung Electronics. There are concerns that this could lead to consumer damage, such as an increase in the price of smartphone terminals. As President Moon Jae-in’s pledge, the ruling party’s move to introduce a separate disclosure system is expected to become ineffective due to the end of LG Electronics’ business, which will intensify the government’s distress.

LG Electronics announced on the 5th that it will end production and sales of smartphones at the MC (smartphone) division, which has a cumulative deficit of 5 trillion won, as of July 31st. Accordingly, it is expected that Samsung Electronics will absorb virtually all of the vacant positions of LG Electronics, which recorded 10% of the domestic market share as of the end of last year. This is because LG Electronics has a structure that is driven by Google’s Android operating system (OS) like Samsung.

A telecommunications industry official said, “Samsung Electronics will occupy 70-80% of the domestic smartphone market share.” I expected.

The introduction of a separate disclosure system, which was being promoted by the Korea Communications Commission to induce a price reduction of handsets through transparent distribution of smartphones in Korea, is also expected to sink below the surface due to LG Electronics’ withdrawal of business.

The separate disclosure system refers to a system in which when telecommunications companies disclose subsidies for cell phones, incentives from cell phone manufacturers such as Samsung Electronics and subsidies from telecommunications companies such as SK Telecom, KT, and LG Uplus are separately labeled. The government promoted the introduction of such a system, hoping that manufacturers would set the factory price higher and then lower the actual sale price by giving incentives, but in the long term, the factory price itself would be lowered.

However, contrary to the purpose of introducing the system, it is pointed out that as LG Electronics disappears from the market, the incentive for Samsung Electronics to competitively lower the terminal price has also disappeared. Apple is not subject to a separate disclosure system because it does not provide incentives like domestic manufacturers do when selling smartphones.

Kim Hong-sik, researcher at Hana Financial Investment, said, “Because LG Electronics’ withdrawal of business will eliminate the meaning of the separate disclosure system, the introduction of the system will inevitably be delayed.” In the meantime, it is difficult to attract Chinese smartphone makers in a situation where there is a continuing technology conflict between the US and China.”

In the Korean market, which is regarded as the’tomb of foreign phones’, Chinese Xiaomi recently is making an attack by throwing a ticket to target LG Electronics’ vacancy. Accordingly, it is pointed out that it is necessary to consider the current closed structure of Korea that purchases and uses smartphones through mobile carriers.

An industry official said, “Currently, Korea is not able to activate the self-sufficiency system in which consumers buy smartphones and go to their desired service provider and use the service.” Opening the smartphone distribution market by disclosing foreign phone information that can be used by the company will be one way.”

There are also voices that Samsung Electronics, which sells smartphones mainly at high prices for consumer choice, should be able to sell products at a wider range of price points in Korea like other countries.