LG - Previous smartphone pioneer quitting the business

On 5th of April 2021, the South Korean tech giant- LG electronics, announced that the company is going to close down its smartphone department and completely withdraw from this market after several years of losses. Although the company will be expected to continue sell its existing models, its department will officially wound down by 31st of July 2021.

This strategic decision would mean that LG is going to leave its 10% market share in the North America market, where it is the NO 3 brand, behind Apple and Samsung. Additionally, LG was also the top 3 smartphone companies back to 2013. But with more competitiveness in the smartphone section, especially from new surged competent companies Xiaomi and OPPO. It has gradually dwindled and lost its popularity. As a result, LG only made profit from quarter 1 of 2014 to quarter 1 of 2015. Then, it has logged six years of a total loss about 4.5 billion US dollars.

The quit of LG would have a tremendous impact on the smartphone market, particularly the North and South America market. Samsung and Apple will attempt to annex LG's market share as soon as possible in order to outpace each other. However, it would also mean an opportunity for some Chinese smartphone firms to recover their losses in the North America market. LG also has a strong presence in the South America market, where Chinese smartphone companies are expected to benefit the most from the departure of LG.

Moreover, companies like OPPO, Xiaomi and Lenovo, which produce smartphones with a similar price to LG’s models, will attempt to occupy the 2% global market share left by the South Korean tech firm.

This is clearly a strategic step for LG. Because by giving up on such a highly competitive sector, the firm is going to be much healthier financially. Therefore, LG can use its smartphone budget on other highly relevant sectors in the future, including electric vehicle components, connected devices and smart homes. The company is also expected to mainly use its savings of 500 billion US dollars annually and double its effort in the electronic car sector. Because LG’s professionals believe that demand for EVs will robust in the coming years.

Finally, its majority of South Korean employees are expected to move to other LG’s electronic business departments and affiliates. While elsewhere employment decisions will be made at the local level. For a period of time, LG will also continue to provide service support and system updates for customers with existing mobile products.

Works cited: Reuters. “LG Electronics to Wind down Mobile Business, Becoming the First Major Smartphone Brand to Withdraw From...” South China Morning Post, South China Morning Post, 5 Apr. 2021, www.scmp.com/tech/tech-trends/article/3128319/lg-electronics-announce s-it-will-no-longer-make-or-sell. Accessed 6 Apr. 2021.

Russell, Jon. “LG’s Mobile Business Is Still Making Big Losses.” TechCrunch, TechCrunch, 25 Jan. 2018, techcrunch.com/2018/01/25/lgs-mobile-business-is-still-making-big-losse s/?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS 8&guce_referrer_sig=AQAAAMb3gHUq3fDZyrmkit0Uq9MmwVOrUHBwq hwdPIi4E6TeiptG5HeHIbvfzAtueZcQ8z1JPdf-YWkkNirPfCnRwZRCaYz6 alKYzQbSRdF0XnBy9O_fmIeXnpKQE5vlZSBDNcveC7qw_zp61kdaz2br dkWxA2kdvlkHH1JhX3V-5Jmw. Accessed 6 Apr. 2021.

“[NEWS in FOCUS] LG’s New Priority: Auto Parts That Don’t Lose Money.” Joins.com, 2020, koreajoongangdaily.joins.com/2021/04/05/business/industry/LG-Electroni

cs-smartphone-automotive/20210405195100427.html. Accessed 6 Apr. 2021.