[NNA] LG Electronics completes withdrawal of smartphones

LG Electronics held a board meeting on the 5th and decided to completely withdraw from the mobile phone business on July 31st. While competition in the global smartphone market is intensifying, it has failed to expand its market share and escape from the operating deficit. The research and development of next-generation mobile communication technologies such as 6G will continue, but the policy is to focus on the automobile electronic equipment business, which is fostered as a home appliance and future promising business through’selection and concentration’.

LG Electronics, which entered the mobile phone business in 1995, released hit products such as’Chocolate Phone’ in the early 2000s, showing its presence in the domestic smartphone market. However, when the heyday of smartphones arrived, it was struggling in competition with foreign manufacturers such as Samsung Electronics, a rival in Korea, and Apple overseas.

About the background of the business withdrawal, LG Electronics said, “In the premium mobile phone market, Samsung and Apple have strengthened their yanggang system, and major competitors are focusing on the entry-level mobile phone market, but our company has failed to achieve results due to insufficient response. Analyzed.

In fact, the MC division, which produces and sells smartphones at LG Electronics, has maintained an operating deficit for 23 consecutive quarters from the second quarter of 2015 to the fourth quarter of last year. On an annual basis, despite recording sales of more than 12 trillion won (about 1,18 trillion yen) in 2016, operating losses amounted to 1.21 trillion won. Sales continued to decline, and last year it fell to 5,2171 trillion won, recording an operating loss of 8412 billion won.

■ Unable to make up for inferiority despite differentiation through uniqueness

LG Electronics has been developing the smartphone business centering on two flagship models,’G series’ and’V series’. It has been trying to differentiate itself from other companies with a unique model, such as the release of the’LG G5′ in 2016 that can be combined with the main body by modularizing an audio device that supports ultra-high sound quality and a hand grip with a shutter button for a camera.

Last year, it introduced a new flagship model’Velvet’ that integrated the G series and the V series, but sales were sluggish.

In the US IT home appliance exhibition’CES’ held online in January this year, the smartphone’LG Rollable’, a smartphone with a curling screen, was first unveiled through a promotional video. It became a phone.

■ Retention of the MC division’s employment

The MC division is disbanded, but all employees belonging to the division are relocated and retained in employment, taking into account the demands of personnel from other divisions and LG affiliates. First of all, it is a policy to listen to the opinions of the employees and respect the hopes of employees as much as possible.

In addition, although the production and sales of smartphones have ended, research and development of mobile technologies such as 6G, cameras, and software will continue to be maintained as they are highly relevant to the business of next-generation TVs, home appliances, and electronic parts. In particular, for 6G technology, the policy is to focus on R&D with the aim of standardization in 2025 and commercialization in 2029.

■ In Korea, Samsung’s solo stage

As LG Electronics withdraws from the smartphone business, it is expected that the domestic smartphone market will consolidate its monopoly system.

According to counterpoint, a market research firm, Samsung Electronics ranked first with about 70% of the Korean smartphone market, and Apple ranked second with about 20%. LG Electronics ranks third with about 10%.

When buying a smartphone in the future, domestic consumers have to choose one of two things:’Samsung Electronics or Apple’. However, since the iPhone has a different mobile OS, LG Electronics smartphone users are likely to switch to Samsung Electronics smartphones.