South Korea’s LG Electronics has announced winding down of its loss-making mobile phone division, making it the first major smartphone brand to withdraw from the global market.
What was the world’s third-largest smartphone manufacturer in 2013 has been bogged down by nearly six years of losses totalling some US $4.5 billion. In 2020, the mobile division registered a loss of US $ 751 million. Dropping out of the fiercely competitive sector would allow LG to focus on growth areas such as electric vehicle components, connected devices and smart homes, the company said in a statement.
LG’s smartphone division—the smallest of its five divisions, accounting for about 7 per cent of revenue—is expected to be wound down by July 31. In South Korea, the division’s employees will be moved to other businesses of the company; elsewhere, the decisions on jobs will be made at the local level. The company has said its existing phones will remain on sale and it will keep providing service support and software updates “for a period of time which will vary by region”.