Battle For LG Mobile Spoils Kick Off, Chinese Brands To Miss Out
The battle for the spoils of LG Electronic failed mobile operation has already kicked in with several brands now vying for the leftovers as the South Korean Company faces the close down of factories and the laying off of staff.
In 2020, LG shipped 28 million smartphones while rival Samsung is said to have shipped over 250 million this led to a loss of around $4.5billion over the past six years as it tried to stay relevant in the competitive phone industry.
At this stage archrival Samsung stands to be a winner — though not the sole one — in the key U.S. smartphone market outside of South Korea LG had their strongest market share.
Currently LG Electronics is mulling over what to do with its overseas phone plants, with outright closure being considered as one possible option, people familiar with the matter claim.
LG’s head office in Seoul, when announcing the handset business exit on Monday, said it planned to “convert” the overseas facilities and use them for other purposes. LG has handset production bases in Vietnam, Brazil, and China.
Earlier this week we reported that the big winner from the decision by LG to exit the mobile market, will be Samsung who is poised to gain customers in the U.S., where LG has a 10% market share — the third biggest.
Both companies both use the Android operating system, the rival of Apple’s proprietary iOS.
“On the Android team, Samsung is expected to benefit as LG withdraws,” said Lee Dong-joo, an analyst at SK Securities.
SK, in a report issued before LG’s withdrawal announcement, forecast that Samsung’s market share in North America will rise to 30% this year from 27% in 2020, while Apple’s portion will decline to 36% from 39% during the same period.
Overall smartphone demand will increase by as much as 16% to 150 million devices in the region in 2021 from last year thanks to a speedy coronavirus vaccination rollout, SK said.
Counterpoint Research, meanwhile, says Samsung is in a better position than Apple after LG’s withdrawal — because of its more diverse product lineup compared with Apple’s focus on the top-tier segment — and could attract some of LG’s customers. Samsung releases new versions of its flagship Galaxy S series smartphones every year while also launching midrange A series handsets.
“Samsung may partially benefit from LG’s exit as its products cover a wide range,” said Counterpoint analyst Kang Min-soo.
SK Securities’ data show that Huawei Technologies, for example, had 0% market share in North America last year as did Xiaomi, Oppo and Vivo.
On Monday, LG said it would continue producing the contracted volumes of smartphones until the end of May. After that, no more LG phones will be produced.
A spokesperson for LG in Seoul said: “Regarding the overseas plants’ operations, the company is reviewing multiple options. Nothing has been confirmed yet.”