Recently, South Korean company LG Electronics announced that it has decided to stop manufacturing and selling smartphones. It is expected that the company will stop manufacturing and selling smartphones after July 31. LG is going to shut its mobile division as it was bearing huge losses. If this happens, LG will become the first smartphone company to withdraw from the smartphone market due to loss-making.
The mobile division was in losses of $4.5 billion
According to the statement issued by LG, the company’s mobile division has incurred a loss of $4.5 billion in the last 6 years. There has been cut-throat competition in the smartphone market at this time. For this reason, LG is forced to opt-out of this segment. The company will now focus on electric vehicle components, connectivity devices and smart homes.
Once, it was the third biggest smartphone brand
In its heyday, LG was known for cell phone innovation and ultra-wide angle cameras. In 2013, the company was the world’s third-largest smartphone maker after Samsung and Apple. But later LG’s flagship models began to struggle with software and hardware problems. Apart from this, the late software update also cost LG badly.
Currently, it holds only 2% share in the smartphone market
According to Counterpoint data, LG currently holds only 2% of the global smartphone market. The company has made only 23 million smartphone shipments last year. While its rival Samsung has shipped 256 million phones.
Currently, LG’s biggest market is in North America. Here LG is the third-largest company after Apple and Samsung and holds 10% market share. Similarly, LG also has a large stake in Latin America. It ranks fifth in Latin America.
Mobile division is the smallest among all divisions of LG
The total business of LG Electronics is divided into five divisions. The mobile division is the smallest in this. The mobile division accounts for 7% of LG’s total revenue. Mobile division employees in South Korea will be shifted to the LG electronics business. According to sources, LG was in talks with Vietnam’s Win Group to sell its smartphone business. But this deal has come to a halt.
This will benefit Samsung and Chinese brands
The closure of LG’s smartphone business will benefit Chinese companies such as OnePlus, Oppo, Vivo, Xiaomi in the low and mid-end segments in South America. Whereas, in Northern America, the benefit will be reaped by Samsung.