SEOUL (Reuters) – South Korea’s LG Electronics Inc said on Monday that it would close its loss-making mobile division – a move that should make it the first major smartphone brand to withdraw completely from the market.
His decision to withdraw will leave his 10% stake in North America, where he is the number 3 brand, to be swallowed by the titans of the Apple Inc and Samsung Electronics smartphones.
The division recorded nearly six years of losses, totaling about $ 4.5 billion, and moving out of the highly competitive sector would allow LG to focus on areas of growth, such as electric vehicle components, connected devices and smart homes, the company said. in a statement.
In better times, LG came to the market early with a series of innovations in cell phones, including ultra-wide-angle cameras, and was in 2013 the third largest smartphone manufacturer in the world, behind Samsung and Apple.
Later, however, its main models suffered from software and hardware problems that, combined with slower software updates, caused the brand to continually fall in favor. Analysts have also criticized the company for lack of marketing expertise compared to Chinese rivals.
Currently, its global share is only 2%. It sold 23 million phones last year, compared to Samsung’s 256 million, according to research provider Counterpoint.
In addition to North America, it has a considerable presence in Latin America, where it is classified as the No. 5 brand.
“In South America, Samsung and Chinese companies like Oppo, Vivo and Xiaomi are expected to benefit in the low and middle income segment,” said Park Sung-soon, an analyst at Cape Investment & Securities.
Although other well-known cellphone brands, such as Nokia, HTC and Blackberry have also fallen from high heights, they have not yet completely disappeared.
LG’s smartphone division – the smallest of its five divisions, accounting for about 7% of revenue – is expected to close on July 31.
In South Korea, the division’s employees will be transferred to other LG Electronics companies and affiliates, while elsewhere employment decisions will be made at the local level.
LG will provide service support and software updates to customers of existing mobile products for a period that varies by region, he added.
Negotiations to sell part of the deal to Vietnam’s Vingroup failed due to differences in terms, sources with knowledge of the matter said.
Reporting by Joyce Lee and Heekyong Yang; Editing by Edwina Gibbs