What They Say
LG Electronics told the Korea Herald that after losing $4.5 billion over recent years, it is considering dropping out of the smartphone business. CEO Kwon Bong-seok said
“Regardless of any change in the direction of the smartphone business operation, the employment will be maintained, so there is no need to worry.”
“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,” an LG official explained. “The company is considering all possible measures, including sale, withdrawal and downsizing of the smartphone business.”
The report suggests that an announcement would be made on Tuesday.
The Herald quoted Counterpoint Research as saying that 70% of LG’s smartphone production was outsourced.
Losses had narrowed in recent quarters, but were still substantial.
In the third quarter of 2020, LG shipped out 6.5 million smartphones, down from 7.2 million in the same quarter of 2019, according to data from Counterpoint. The company held a 2 percent share in the market.
What We Think
As I said many years ago, the smartphone business has become a ‘hits’ business. It’s about getting the top selling models and only a handful of makers can win these profitable segments. The rest are squeezed into a fiercely cost-driven commodity market. LG has tried a lot of different strategies and design approaches (e.g. the Flex and the Wing and, very recently, the Rollable), but it has never quite ‘caught the wave’. The next question is how long others such as Sony can continue to stay in the market. (
Of course, LG will no doubt continue to stay in the smartphone supply chain with displays (etc) (BR)
