Fierce competition may see LG drop smartphone business

LG has been struggling to maintain a high level of competition in the smartphone space for many years now, reportedly losing around 5 trillion won ($4.5 billion) in this sphere over the last 5 years. Just last year LG took steps to increase its outsourcing for the lower end of its phone production in a bid to boost profits, but 2020 still say the company’s market share decrease, shipping just 6.5 million phones in Q3 of 2020, compared to 7.2 million at the same period the previous year. 

 

The smartphone business has posted losses for 23 consecutive quarters. 

 

Now, it seems that the electronics company may be preparing to finally cut its losses in the market, with a letter sent to staff on Wednesday by company CEO Kwon Bong-seok suggesting that there may be a “change in direction for the smartphone business”. The note was first reported on by the Korea Herald.

 

“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,” a company official letter later confirmed. “The company is considering all possible measures, including sale, withdrawal and downsizing of the smartphone business.”

 

The letter promised that no jobs would be lost as a result of any potential strategic decision, Kwon reassuring staff that ‘there is no need to worry’. Nonetheless, a complete withdrawal from the smartphone market would entail some major upheaval, with over half of LG’s staff in the smartphone business needing to be reassigned.

 

Meanwhile, Huawei and Samsung battle it out for the top spot in the smartphone market, with the latter currently holding the lead with around a 30% market share. Huawei made the decision to sell its budget smartphone brand Honor back in November, suggesting that the Chinese vendor would instead focus on high-end handsets.