On Monday, in a significant development South Korea’s LG Electronics Inc said it will stop the production and sales of its loss-making smartphone division.
Earlier this year in January, LG had announced that it was considering all options for the business after recording nearly six years of losses totaling to nearly $4.5 billion. Talks to sell part of the business to Vietnam’s Vingroup fell through due to differences on terms, said sources with knowledge of the matter at hand.
LG Electronic’s mobile division is the smallest of LG’s five divisions, and accounts for only 7.4% of revenue in the fourth quarter.
LG had come out with a number of cell phone innovations including ultra-wide angle cameras, and in the first half of 2013 it had risen to become the world’s third-largest smartphone manufacturer behind Samsung Electronics and Apple Inc.
But with its flagship models suffering from both software and hardware mishaps which combined with slower software updates saw the brand steadily lose in favor of consumers. Analysts have criticised the company for lack of marketing expertise compared to Chinese rivals.
Currently LG is the third biggest brand in North America and the fifth biggest in Latin America, going by market share. Globally its market share is just 2%.
According to research provider Counterpoint, in 2020 LG shipped 23 million phones in contrast to 256 million by Samsung,
LG is expected to hold on to its mobile technology for use in its home appliances business and its burgeoning vehicle components business. In late 2020, it launched a joint venture with automotive supplier Magna International Inc with the aim to produce key components for electric cars.