What They Say
As expected, today LG’ Electroncs’ board of directors decided to quit the smartphone business, although the existing inventory will be sold and there will be on-going support for hardware and software. The firm expects to be out of the sales and production side by the end of July. The company will continue to work on communications network technologies including 6G. Bloomberg reports that smartphones were 8.2% of LG’s business last year, so there will be a small impact to revenue, but this will be recovered by more work in the automotive segment and areas including cameras.
The company tried to sell the business, but there was a difference in view of the value of LG’s ip between the firm and potential buyers.
What We Think
This must have been a very hard decision for LGE, especially when the management looks at its rival in Seoul. Still, it makes sense. It was very hard to see how the division could be made profitable. LG Display should be able to replace LGE as a customer, although it may take some time.
LG had tried a number of different ways to innovate in its smartphones, but it found it hard to build the volume it needed. There will be those that lament that the LG Rollable concept will not go ahead. (BR)
