LG is considering exiting the smartphone business entirely amid declining shipments and accrued losses of $4.5 billion over the past five years (via The Korea Herald).
LG CEO Kwon Bong-Seok cautioned staff earlier today that the company is re-evaluating its presence in the smartphone industry:
Since the competition in the global market for mobile devices is getting fiercer, it is about time for LG to make a cold judgment and the best choice. The company is considering all possible measures, including sale, withdrawal and downsizing of the smartphone business.
He added that regardless of any change, the company will retain its current employees from the smartphone division and reassign them elsewhere.
LG has seen rapidly declining smartphone shipments in recent years, and the company is now believed to hold a market share of just two percent. LG has posted major financial shortfalls in its smartphone segment for 23 consecutive quarters, reaching a total loss of $4.5 billion.
When taking office as CEO in January 2020, Kwon pledged to turn the company's smartphone business around. The CEO's latest comments therefore appear to be an admission of failure to make the segment profitable.
At the same time, LG is reportedly ending its production of LCD displays for the iPhone, according to The Elec. LG Display had previously attempted to supply LCDs for the second-generation iPhone SE, but failed to meet Apple's requirements, leading to Japan Display and Sharp being selected as suppliers instead. LG's factory that previously made the components will be repurposed to manufacture automobile display panels.
Earlier this month, LG unveiled one of the world's first rollable smartphones at CES, as the company has endeavored to explore unusual designs to lure in customers. The future of this device, and other LG smartphones such as the LG Velvet and LG Wing, are now highly uncertain.
Top Rated Comments
Even if you sell massive amounts of a product and gain sizable market share, you can still be bleeding money and not be viable.
This is not about LG not innovating, not doing great phones and quality builds, I would say it has nothing to do with sells being low even, or not marketing properly.
The premium bracket of smartphones is cornered with Apple taking in 80-90% of the profits of the whole worldwide smartphone business and the rest 20-10% left to scramble by a myriad of manufacturers on all price brackets, from $50-80 USD borderline dumb android phones all the way up to $2K foldables.
Think about this for a second. Then, include all the emerging value-oriented Chinese manufaturers into the equation and you’ll see how even Samsung might be in trouble going forward.
https://www.forbes.com/sites/chuckjones/2018/03/02/apple-continues-to-dominate-the-smartphone-profit-pool/