Last week, Korean publication He c published an article claiming that LG Electronics notified its employees that it was closing its smartphone business. This reportedly included stopping the development of the company’s mobile smartphone, which they said will be launched later this year. However, LG’s head of global corporate communications, Ken Hong, said XDA that the rumor was “definitely false”. But now it seems that the rumor contained some truth.
Yesterday, a plethora of Korean stores reported that LG is considering leaving the smartphone business. The bell reported that LG is considering restructuring its business by removing only its line of premium smartphones, while New Diary reports that LG is considering selling its smartphone business. Meanwhile, The Korea Herald reported that the CEO of LG Electronics, Kwon Bong-seok, has sent a memo internally suggesting that a major change may be coming in the smartphone business.
“Regardless of any change in the direction of the smartphone business operation, employment will be maintained, so there is no need to worry,” he said. An unidentified LG employee said The Korea Herald the following: “Since competition in the global mobile device market is getting tougher, it is time for LG to make a cold judgment and the best choice,” explained the unnamed official. “The company is considering all possible measures, including selling, withdrawing and reducing the size of the smartphone business.”
LG subsequently confirmed for The Verge that the aforementioned memo is genuine, but nothing is defined yet. In a statement, LG told the publication that “management is committed to making any decision necessary to solve its mobile business challenges in 2021”, but that “to date, nothing has been finalized”. According Pim News, the biggest bidder for LG’s smartphone business is VinGroup, a Vietnamese company that has plans to enter the American market. An acquisition of LG’s smartphone business would help them quickly enter the United States, although it has yet to be confirmed that LG will sell its smartphone business, much less to VinGroup.
Ultimately, it is not surprising to hear that LG Electronics is considering selling its smartphone business. As pointed out The Korea Herald, LG’s smartphone business has recorded deficits in the phone segment over the past 5 years and has reported operating losses for 23 consecutive quarters since the second quarter of 2015. When Kwon Bong-seok became CEO of LG Electronics in early 2020, he promised make a turnaround in the smartphone business by 2021. To that end, LG has implemented several new strategies to win back customers. It switched its G series in favor of Velvet, launched Project Explorer to bring innovative concepts to life and began to outsource the production of its cheap MDG phones.
The loss of LG in the smartphone world would be a major blow to the industry. Although his efforts have not been very successful, the smartphones he offered often met needs that were not being met by anyone. For example, the company’s emphasis on audio quality has made its smartphones stand out among audio enthusiasts – in fact, they are one of the few remaining OEMs to offer headphone connectors in their premium products! They are also at the forefront of some industry trends. Notably, the company’s V40 was the first modern smartphone with a triple camera setup consisting of a main, wide-angle and telephoto lens, a setup that has appeared in several flagships since then. While the phones’ software support and value for money don’t exist, there is no doubt that LG smartphones have brought a lot to the table, so we’ll be disappointed when they leave. However, there is a chance that the company will change things, so we will keep an eye on the reports to see where the company is heading in 2021.
Featured image: LG Wing