South Korean electronics maker, LG has announced the closure of its mobile division after nearly six years of losses and thus an era has come to an end. LG said in a statement that the mobile division had been at a loss for nearly six years, costing it about 4.5 billion dollars. The statement said LG would provide existing mobile phone users with one-time services support and software updates, but its application would depend on the needs of each region.
LG was once one of the world's largest mobile phone companies, but Samsung and Chinese companies lost its popularity. After abandoning the smartphone sector, LG plans to focus on areas such as electric vehicles, connected devices and smart homes.
LG Electronics is the first company to say goodbye to the world of smartphones. Famous mobile phone makers like Nokia, HTC and Blackberry have also introduced many popular mobile phones in the past but the market of these companies is also shrinking now.
Prior to LG, companies such as BlackBerry and Nokia had to abandon their smartphone business due to difficulties, although both of these companies have re-entered in the market with new branding and licenses.
Many advanced technologies and cutting-edge features including ultra-wide angle mobile cameras were first introduced by LG. Due to its innovations, at one point in 2013, it became the world's third largest smartphone manufacturer after LG, Samsung and Apple. However, later its flagship model had problems with both software and hardware. In addition, delays in software updates were causing problems for the brand.
At the end of 2020, LG was not among the top 5 smartphone companies in the world. Although Huawei is facing difficulties due to US sanctions, it is still one of the top 5 companies along with Samsung, Apple, Xiaomi and Oppo. Analysts have also criticized the company's lack of market experience compared to its Chinese rivals. LG's mobile division has never been profitable since 2015, while it now faces competition from Samsung and several Chinese companies.
On the other hand, according to a study provided by Counterpoint, the company's global share is currently about 2%. It shipped 23 million phones last year. In contrast, Samsung exported 256 million phones that year.
The decision to leave the market would also eliminate LG's 10% stake in North America, where it is the third most popular brand, while North American smartphone giants Apple and Samsung will benefit. Apart from North America, it is the fifth largest brand in Latin America.
According to analysts, due to the strained relations between China and the United States, LG's rival Chinese companies Oppo, Vivo and Xiaomi do not have such a large presence in the United States. Therefore, in the absence of LG, Samsung could take advantage of the lower and mid-range mobile phone market.
The smartphone division is the smallest of LG's five divisions and accounts for only 7% of revenue. It is expected to close by July 31. LG had also hinted at the introduction of foldable phones in January 2021, but now this plan has also been scrapped.
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