Site icon Daily Business

LG first big smartphone maker to quit market

No new models from LG

South Korea’s LG Electronics will become the first major smartphone maker to pull out of the market following a decision to wind down its loss-making mobile division.

The company has a 10% share of the market in North America where it is the third-biggest brand. This is likely to be absorbed by Samsung Electronics and Apple.

Ko Eui-young, an analyst at Hi Investment & Securities said Samsung is expected to take the bigger share because LG has targeted lower range models closer to its domestic rival’s mid-priced product lines than those offered by Apple

LG’s smartphone division has logged nearly six years of losses totalling about $4.5 billion.

It said the mobile phone market had become “incredibly competitive”.

Dropping out of the sector has been rumoured in the tech industry for several weeks. The company said it would allow LG to focus on growth areas such as electric vehicle components, connected devices and smart homes.

In better times, LG was early to market with a number of cell phone innovations including ultra-wide angle cameras and at its peak in 2013, it was the world’s third-largest smartphone manufacturer behind Samsung and Apple.

But later, its flagship models suffered from both software and hardware mishaps which combined with slower software updates saw the brand steadily slip in favour. Analysts have also criticised the company for lack of expertise in marketing compared to Chinese rivals.

While other well-known mobile brands such as Nokia, HTC and Blackberry have also fallen from lofty heights, they have yet to disappear completely.

LG’s current global share is only about 2%. It shipped 23 million phones last year which compares with 256 million for Samsung, according to research provider Counterpoint.

Talks to sell part of the business to Vietnam’s Vingroup fell through due to differences about terms, sources with knowledge of the matter have said.

Do you own an LG phone?

LG says the wind down of its mobile phone business is expected to be completed by 31 July.

However, current models of LG phones will remain on sale in stores and online, and service support and software updates will continue for existing LG phone customers.

Exit mobile version