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LG contemplates smartphone market exit

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LG is said to be contemplating exit from the smartphone business. The company has registered six successive loss-making years. Hence, as per The Korea Herald, “a change is coming.” The publication reports that LG CEO Kwon Bong-seok on Wednesday sent out a message to staff. This message hinted that there would be a “major change” in the operation of the smartphone segment.

“Regardless of any change in the direction of the smartphone business operation, the employment will be maintained, so there is no need to worry,” he said. On the other hand, an LG official explained, “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.” The official went on to say that the company is considering all possible measures, including “sale, withdrawal, and downsizing of the smartphone business.

It is tipped that about 60 percent of the staff at LG would be moved and reassigned to other business units within the company or other LG affiliates. However, the future of the other 40 percent of employees is not clear. They might remain in the far smaller mobile arm or let go. Engadget reports

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that LG could follow the footsteps of Sony as it will need to retain some of that institutional knowledge. Sony kept its mobile division running so long to ensure it can leverage the technologies used in phones for any future frontier of gadgets.

This is not the first time LG has been subject to such rumors, since it announced the outsourcing of its low-end and midrange phone production in 2019. At that point in time, LG denied the rumors, explaining that it was increasing the volume of original development manufacturing in a bid to raise efficiency. However, as of last year, LG has posted operating losses for 23 consecutive quarters

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. Hence, the exit could be happening. The company’s accumulated loss has reached 5 trillion Won (over $4.5 trillion) over the last five years.

As of now, LG is working on its Project Explorer, under which it announced the LG Wing. It is gearing up to launch its rollable phone this year. The device is said to pack a 7.4-inch display, which could be used in phone mode, video mode, and productivity mode. That said, are “wow factors” enough to keep LG’s smartphone business alive? Only time will tell.

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