LG Smartphones with 20 Quarters of Losses Seek Turnaround with 'Velvet' (Comprehensive)

Q2 Operating Loss of 237.8 Billion KRW... Deficit Widens
'Velvet' Launch Next Month as Weapon... "Cost Profitability Improvement"
Smartphone Portfolio Differentiation Strategy by Price Range
Flagship with Innovative Form Factor, Mid-Low Range Focused on Specs and Design

[Asia Economy Reporter Han Jinju] LG Electronics' MC Business Division has recorded a painful performance of 20 consecutive quarters of losses. The impact of the novel coronavirus disease (COVID-19) further shrank smartphone sales, compounded by supply disruptions from Chinese ODM partners and overseas store closures. Although the smartphone market outlook for the second quarter is even gloomier, LG Electronics plans to maximize market profitability by expanding its mass-premium phone 'LG Velvet' and mid-to-low-end 5G smartphone lineup.

On the 29th, LG Electronics' MC Business Division announced first-quarter sales of 998.6 billion KRW and an operating loss of 237.8 billion KRW. Sales decreased by 33.9% compared to the same period last year, and operating losses increased. Despite a sharp decline in smartphone sales due to supply issues with Chinese ODM partners and store closures in Europe and Latin America, LG Electronics explained that they reduced expenses by cutting labor and marketing costs through production efficiency improvements.

In the second quarter, global market uncertainties are expected to increase, and competition among manufacturers will intensify due to declining smartphone demand. LG Electronics plans to unveil the mass-premium new product 'LG Velvet' on the 7th of next month and launch it on the 15th to turn the tide. Emphasizing design strengths, they have abandoned the G series and completely revamped the brand. Since the cost profitability has been improved compared to the previous model, they expect it to help improve sales.

Seo Dong-myung, Head of Planning and Management at LG Electronics' MC Business Division, said, "LG Velvet is a product that enhances design and functionality at a reasonable price, and we will avoid excessive price competition while improving cost profitability compared to the previous model. We plan to launch it in advanced 5G markets such as Korea, North America, and Japan, and expect that expanding sales volume will help improve profitability."

LG Electronics plans to respond to the market by building a differentiated product portfolio by price range. Flagship products priced over 1 million KRW will feature innovative form factors such as rollable displays, while products priced over 500,000 KRW will compete on specs and design.

Seo said, "High-end products priced over $1,000 are being prepared as differentiated form factor products targeting customers who pursue innovation and diversity, aiming to enhance brand image and lead a shift in customer perception."

He added, "For products priced between $599 and $999, we will develop a lineup positioned as mass-premium products with competitive design and specs at reasonable prices to ease purchasing burdens and maximize sales by absorbing the expanding 5G demand."

LG Electronics 'Q61'

By expanding the 5G smartphone lineup to mid-to-low-end products, LG Electronics is also aiming to increase its market share in the 5G smartphone market. In February, LG Electronics launched the mid-range smartphone Q51 priced in the 300,000 KRW range, and plans to release its successor, the 'Q61,' in the second quarter.

Seo explained, "We launched the V50 in the North American market on March 20 and plan to release the Velvet domestically in May. While operating 5G smartphones in major markets, the share of 5G smartphones was 13% last year, but the goal is to expand it to 30% this year."

This content was produced with the assistance of AI translation services.