LG may exit smartphone market after accumulated operating loss hits nearly $4.5 bn

LG Electronics last week announced that it is open to "every possibility" for its future operations amid rumours that the company may sell the struggling mobile business.
LG Mobiles
LG Mobiles
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The mobile business of LG Electronics has been on a downswing since the second quarter of 2015, with its accumulated operating loss reaching nearly $4.5 billion last year and now, the South Korean company is planning to exit from the competitive smartphone market. 

LG has been quite brave with its recent mobile forays, experimenting with what comes next in smartphones. Consider, for instance, the rather exciting foldable LG Wing, or the forthcoming rollable device. 

However, significant and sustainable market success has eluded LG to date including in India. LG's share in the global smartphone market is estimated to be between 1 and 2%.

According to Prabhu Ram, Head-Industry Intelligence Group (IIG), CMR, as a diverse conglomerate, LG is best placed to clearly map emerging opportunities and challenges in a rapidly evolving post-virus world. 

"It may potentially choose to eschew the faltering smartphone business for its strengths in the consumer appliance business, as well as future-focused robotics and automotive,'' Ram told IANS.

LG Electronics last week announced that its mobile communications (MC) unit is open to "every possibility" for its future operations amid rumours that the company may sell the struggling mobile business.

Due to its quick decline in the market, there have been 23 consecutive quarters where the company has faced a financial loss. 

LG has been striving to make a turnaround in its mobile business in recent years, shifting its smartphone production base to Vietnam, while expanding outsourcing deals.

"LG has been showcasing and unveiling some exciting stuff in reputed exhibitions like MWC and CES, but on the ground, we haven't seen them gaining much in the recent years. Honestly, I don't see their exit having any impact on the industry," said Faisal Kawoosa, Founder and Chief Analyst, techARC.

"It's good that LG decides to exit this business sooner, at least from India's perspective," he added.

In light of the immense competition from Chinese mobile manufacturers, LG has not been able to reclaim its lost market share in India. 

LG certainly is bringing more innovation to its smart TV segment. The company announced the first rollable TV last year and during the CES 2021, it showcased its transparent OLED panel. 

"LG has always launched competent smartphones and after Samsung, it has been the only smartphone player that has worked on innovation in shapes and technology, like the scratch-free G6 or the foldable G8xThinQ," said Ramesh Somani, Chief Editor and Publisher, Exhibit Magazine and BBC TopGear India. 

"Their exit will be a big loss to the innovative spirit of the smartphone industry and at the same time, their shrinking market share will not make for a business case," he added.

To boost its premium smartphone sales, LG last year launched the Explorer Project. Under the project, the company released the Wing, a dual-screen smartphone with a rotating form factor. 

For this year, LG was scheduled to launch a smartphone with a rollable OLED display.

(Md Waquar Haider can be reached at waquar.h@ians.in)

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