LG in South Korea becomes the first major smartphone brand to withdraw from the market

SEOUL (Reuters) – LG Electronics Inc of South Korea will cancel its mobile division at a loss after not finding a buyer, a move that will be the first major smartphone brand to withdraw completely from the market.

His decision to give up will leave the 10% share in North America, where the mark no. 3, which will be swallowed by Samsung Electronics and Apple Inc., its internal rival being expected to have the advantage.

“In the United States, LG has targeted mid-priced models – if not very low – and that means Samsung, which has more mid-priced product lines than Apple, will be able to better attract LG users,” said Ko. Eui- young man, analyst at Hi Investment & Securities.

LG’s smartphone division has lost nearly six years, totaling about $ 4.5 billion. Leaving the highly competitive sector would allow LG to focus on growth areas such as electric vehicle components, connected devices and smart homes, a statement said.

In better times, LG launched early in the market with a number of innovations in the field of mobile phones, including ultra-wide angle cameras and, peaking in 2013, was the third largest smartphone manufacturer in the world in behind Samsung and Apple.

But later, its flagship models suffered from both software and hardware inconveniences, which, combined with slower software updates, caused the brand to constantly slip in its favor. Analysts also criticized the company for its lack of marketing expertise compared to Chinese rivals.

While other well-known brands of mobile phones, such as Nokia, HTC and Blackberry, have also fallen from a height, they have not yet completely disappeared.

LG’s current overall share is only 2%. Last year, 23 million phones were shipped, compared to 256 million for Samsung, according to research provider Counterpoint.

In addition to North America, it has a considerable presence in Latin America, where it ranks 5th.

While rival Chinese brands such as Oppo, Vivo and Xiaomi do not have much presence in the United States, in part due to frozen bilateral relations, their mid-range and mid-range Samsung product offerings will benefit from LG’s absence in Latin America, analysts said.

LG’s smartphone division, the smallest of its five divisions, accounting for about 7% of revenue, is expected to be liquidated by July 31.

In South Korea, the division’s employees will be moved to other LG Electronics companies and subsidiaries, while employment decisions will be made elsewhere locally.

Analysts said that in a conference call, they were told that LG intends to retain its core 4G and 5G technology patents, as well as its core R&D staff, and that it will continue to develop 6G communication technologies. They have not yet decided whether they will license such intellectual property in the future, they added.

LG will provide service support and software updates to customers of existing mobile products for a period of time that will vary by region, he added.

Discussions to sell part of the business to the Vingroup group in Vietnam have fallen due to differences in terms, said sources with knowledge of the matter.

LG Elec shares have risen about 7% since an announcement in January that it had considered all options for the deal.