BREAKING NEWS: It’s Official, LG Out Of Mobile Phone Market
As tipped by ChannelNews LG Electronics is getting out of the smartphone business, the decision was approved by its board of directors earlier today.
The decision came two months after the company said its MC division is open to “all possibilities” for its future operations.
LG said it will produce handsets until end-May to meet existing orders from its clients and promised to provide sufficient after-sales services to LG phone owners even after it quits the mobile business.
LG’s mobile business has been in the red since the second quarter of 2015. Its accumulated operating losses reached US$4.4 billion last year.
LG, once the world’s third-largest handset maker, reportedly had talks with Vingroup of Vietnam and Volkswagen of Germany to sell the mobile business, but the talks fell through, according to industry insiders.
In an offical statement sent to ChannelNews the Company said that their exit from the mobile business will lead to a decline in revenue for the company in the short term but will eventually improve its financial status and management efficiency in the longer period.
Analysts said that LG’s operating profit could go up by 1 trillion won this year if it withdraws from the loss-making mobile business.
LG’s strategic decision to exit the incredibly competitive mobile phone sector will enable the company to focus resources in growth areas such as electric vehicle components, connected devices, smart homes, robotics, artificial intelligence and business-to-business solutions, as well as platforms and services.
Current LG phone inventory will continue to be available for sale. LG will provide service support and software updates for customers of existing mobile products for a period of time which will vary by region. LG will work collaboratively with suppliers and business partners throughout the closure of the mobile phone business. Details related to employment will be determined at the local level.
Moving forward, LG will continue to leverage its mobile expertise and develop mobility-related technologies such as 6G to help further strengthen competitiveness in other business areas. Core technologies developed during the two decades of LG’s mobile business operations will also be retained and applied to existing and future products.
The wind down of the mobile phone business is expected to be completed by July 31 although inventory of some existing models may still be available after that.