South Korea’s LG Electronics has stunned the global business community by deciding to exit the mobile phone business completely by the end of July, making it the first major brand to do so.
LG revealed the decision in an announcement in South Korea on Monday after failing to find a buyer in a three-month search.
LG’s move is not only stunning for the decision to exit a high-profile consumer product completely, but it is a very rare move by one of South Korea’s giant groups (Samsung, Hyundai, LG, SK, Lotte – all known as chaebols) to admit defeat in a major global business area.
It leaves Samsung and Apple as the dominant global brands, pursued by a host of Chinese companies led by Huawei ZTE, Lenovo, OnePlus · Xiaomi and Oppo.
While venerable phone makers such as Nokia, HTC and Blackberry have fallen by the wayside, their brands can still be found on phones made and sold by different owners.
LG will now proceed to wind down the division, hanging on to some technology (patents) and maintaining a service business for the owners of their models still in service. Staff employed in the business – the smallest of LG’s seven divisions – will be transferred to other parts of group.
Analysts say that the decision puts 2% globally up for competition with the prize being 10% of the huge US where it runs Number 3 behind Samsung and Apple. LG shipped 23 million phones in 2020, according to Reuters. That’s about $US1.5 billion in revenues which will soon be sucked up by rival companies.
Its current weak global position is a long way from 2013 where it was Number 3 behind Samsung and Apple but since then it has fallen behind its rivals with slow updates, weak software and functions and could never keep up with the upgrades from Samsung and Apple and couldn’t match the price cutting of a fleet Chinese based rivals.
