Report: LG Will Kill its Smartphone Business on April 5th
LG hasn’t earned a profit on smartphones in years, and a leaked menu last month suggested the company was considering radical steps to change that. One of the options was to shutter the smartphone business entirely, and it’s looking increasingly like that’s what will happen. A report from The Korea Times claims LG will make the announcement on April 5th.
The leaked memo laid out several options, including a sale or split sale of the company’s smartphone business. A more recent report claims that LG talked to a few interested parties, but it was unable to come to an understanding with any of them. That’s not very surprising when the part of the business it wants to unload has lost $4.5 billion in the last five years.
LG confirmed the original memo was real, but it has refused to speculate about what a shutdown of its mobile business would entail. All the company will say is that it’s keeping all possibilities open. However, I think this was a foregone conclusion the moment LG didn’t deny it was considering a full shutdown of smartphone work. If LG doesn’t think LG phones can sell, no one else is going to risk losing money on them.
Many observers expected an announcement of LG Mobile’s future at the recent shareholders’ meeting on March 24th. However, Chief Financial Officer Bae Doo-Yong would only say LG was keeping its options open. The ax may fall next week, though. The Korea Times reports that LG will make its exit from the mobile space official during a board meeting on April 5th.
LG was one of the earliest Android device makers, and it had reasonable success for several years. It even gave its hometown rival, Samsung, a run for its money in those heady days of Cupcakes and Donuts. By the time Google got to Marshmallow, LG’s fortunes were already sliding. The 2016 launch of the LG G5 with support for modular accessories was supposed to reinvigorate LG’s mobile business. However, the phone flopped, and LG never released any modules. It moved on to more integrated and sleek phones such as the G6 and, most recently, the Velvet, but it never pulled out of its tailspin. The 2020 release of the bizarre LG Wing swiveling phone did little to level off its descent.
Without LG in the mix, Samsung could see its market share tick upward, but it’s already the clear leader among Android OEMs. Motorola could benefit more as it already has numerous devices that compete in the same price brackets as LG’s phones. Newer Chinese OEMs like Oppo and Realme could also see this as an opportunity to expand.