LG Exits Mobile Phone Market: What You Need To Know

LG Electronics Inc. (KRX: 066570) has announced its withdrawal from the mobile phone industry, with plans to completely exit the sector by July 31.

What Happened: In a press statement, the Seoul-headquartered LG stated that its “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.”

The company noted that service and support and software updates for current mobile phone customers will “vary by region” and employment related to this business unit “will be determined at the local level.”

The company added that it would use the expertise it gained in this sector to “develop mobility-related technologies such as 6G to help further strengthen competitiveness in other business areas.”

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Why It Matters: The LG announcement did not mention the financial ramifications of closing the mobile phone business, but this move will help to mitigate mounting losses.

Earlier this year, the Korean Times reported that LG CEO Brian Kwon hoped the mobile division would be profitable this year, promising a new product parade “with some wow factors to woo consumers.”

But according to a BBC report, the division lost approximately $4.5 billion over the last six years, citing data from Counterpoint Research that noted LG shipped 28 million phones in 2020, far behind the 256 million phones shipped by its Korean rival, Samsung Electronics Co Ltd (KRX: 005930).

Counterpoint Research determined that LG only commanded roughly 9% of the U.S. smartphone market as of the fourth quarter of 2020, compared to the 65% share held by Apple Inc AAPL and 16% by Samsung. On a global level, Samsung, Apple and Huawei are the international market leaders, followed by the Chinese firms Xiaomi Corp. XIACF and BBK Electronic's Oppo, and Vivo, with LG in a distant seventh place.

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(The LG Spirit from 2015. Photo courtesy Kārlis Dambrāns / Flickr Creative Commons.)