LG Mobile Communications

History

2021

Company closure due to LG's refusal to manufacture smartphones

On April 5, 2021, LG Electronics officially announced its withdrawal from the global smartphone market. The Company shall close the relevant division in accordance with the decision of the Board of Directors.

The company's refusal to produce smartphones will lead to a decrease in revenues in the short term, but will ultimately improve its financial situation and management efficiency, the South Korean manufacturer said in a statement.

The company expects that the mobile phone division will finally stop working by July 31, 2021. Already released LG phones will still be available for sale, and the company will continue to provide service support and update the software for a certain time. The period of support depends on the country, noted in LG.

LG officially announced its withdrawal from the smartphone market

In the future, the corporation intends to focus on the production of components for electric vehicles, smart homes, robots, as well as the development of artificial intelligence and business products.

According to The Korea Herald, before the official announcement of the departure from the smartphone market, LG had already begun to disband the telephone division and transfer its employees to other business areas of the company. Amid a continuing decline in smartphone sales, LG sells high-tech TVs and household appliances well, which is facilitated by the COVID-19 pandemic, which has caused people to spend more time at home. In addition, the South Korean company is expanding the automotive business, including through partner projects with participants in this market, the publication said.

According to the research company Counterpoint Research, the share of LG smartphones in the global market in 2020 was 2%. During this 12-month period, the company sold 24.7 million tubes, becoming the 9th largest smartphone manufacturer in the world.^[1]

Dismissal of 60% of staff

January 20, 2021 it became known about the reduction of 60% of the staff in the division of LG Mobile Communications, specializing in the development and sale of smartphones. LG Electronics CEO Kwon Bong-Seok warned about the large-scale layoffs in a letter sent to company employees.

Competition in the mobile business, which includes smartphones, is intensifying in the global market. At the moment, we are open to every opportunity and are carefully reviewing our plans for the future... We at LG Electronics believe that the moment has come when we need to make the most correct decision regarding the mobile division, given the level of competition at the moment and in the future, "he wrote.

LG cuts 60% of staff in LG Mobile Communications division and prepares to say goodbye to it

LG's telephone business records losses for 23 consecutive quarters, fueling rumors about its possible sale. The company has repeatedly denied them, but on January 20, 2021, Kwon Bong Sok confirmed that LG was considering such a deal. It is expected that the South Korean manufacturer will stop producing smartphones by the end of 2021.

An industry expert, whose name is not given, told reporters at The Korea Times that LG's presence in the mobile phone market has decreased to such an extent that the company has ceased to be a serious competitor to industry leaders such as Apple, Samsung and Chinese brands.

From the point of view of hardware specifications, there may not be a big difference between Galaxy and LG smartphones, but when it comes to services and software, consumers are more attracted to more developed ecosystems, such as Samsung and Apple, the specialist said. He also added that with Apple, Samsung and Chinese vendors dominating the market, LG, which loses to competitors, is very difficult to make money on this business.^[2]

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