Due to the competition in the smartphone business is getting tougher. Moreover, strong competitors such as Samsung, Apple, Huawei and Xiaomi, LG mobile phones are rumored to be disappearing from the market. Over the past five years, LG Electronics has suffered losses of US $ 4.5 billion.
The indication is, on Wednesday (20/1/2021), LG Electronics CEO Kwan Bong Seok sent a message to staff indicating that there will be major changes in the operation of the smartphone segment.
“Apart from a change in the direction of smartphone business operations. Labor absorption will be maintained, so there is no need to worry,” he said as quoted by The Korea Herald, Thursday (21/1/2021).
“Due to the increasingly intense competition in the global market for mobile devices, it is time for LG to make the best judgment and choice,” said an LG official. “The company is considering all options including selling, product recalls, and reducing the smartphone business.”
In 2019, LG was Rumored to Quit Its Smartphone Business
This is not the first time that LG has been rumored to quit its smartphone business. In 2019, the issue was raised and denied by the company. The rumors continued as LG posted a deficit in the mobile segment for the last five years.
Last year, the smartphone business recorded operating losses for 23 consecutive quarters, since the second quarter of 2015.
In the third quarter of 2020, operating losses totaled 148.4 billion won, down from 206.5 billion won in the first quarter and 237.8. billion won in the second quarter. However, the accumulated losses amounted to US $ 4.5 billion over the past five years.
LG Electronics CEO Kwon Bong Seok, when he took office for the first time in January 2020, promised to make a turnaround in the smartphone business by 2021.
“The company is increasing the profitability of the smartphone business by cutting costs, and will seek growth in the premium market next year,” Kwon told reporters. in December.
Last year, LG made the bold decision to leave its G series smartphone brand and start a new smartphone project. The company launched two flagship phones: LG Velvet which focuses on the design and new form factor LG Wing.
Despite these efforts, LG’s presence in the global smartphone market has waned. In the third quarter of 2020, LG shipped 6.5 million smartphones, down from 7.2 million in the same quarter of 2019, according to data from Counterpoint. LG’s market share in global smartphones is only 2%.
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