"Another Price War? LG Velvet and S20 Also See 'Up to 600,000 Won Official Subsidy' Emerging"

LG Velvet, released last May

[Asia Economy Reporter Joselgina] High public subsidies in the '600,000 KRW range,' which had been hard to see for a while, have been appearing one after another this month. With the launch season for new smartphones in the second half of the year, the Galaxy S20 series, which began sales earlier this year, as well as the LG Velvet, priced below 900,000 KRW, have seen public subsidies soar up to 600,000 KRW.

According to the industry on the 11th, KT significantly raised the public subsidy for the LG Velvet from 480,000 KRW to 600,000 KRW as of the previous day. This is the highest level among the three major mobile carriers' subsidies, under the condition of using the highest monthly plan in the 100,000 KRW range for a certain period. Considering the LG Velvet's retail price of 899,800 KRW, the subsidy has risen to about two-thirds of the price. When it was released in May, the subsidy was only in the 180,000 KRW range.

Accordingly, including additional subsidies, the actual purchase price drops to around 200,000 KRW. The newly announced subsidy is even higher than SK Telecom's 500,000 KRW, which raised its subsidy on the 4th, and LG Uplus's 500,000 KRW, which belongs to the same corporate group as the manufacturer.

It has been a long time since a 600,000 KRW public subsidy appeared in the smartphone market. At the time of 5G commercialization last year, competition among the three carriers to secure subscribers intensified, pushing subsidies up to 700,000 KRW at the highest, but since then, a trend to refrain from cutthroat competition has spread.

Smartphones offering public subsidies in the 600,000 KRW range have been increasing significantly this month. Leading the way is KT. On the 1st, KT raised the public subsidy for the Galaxy S10 series, which has been on the market for over a year and a half, to the highest 600,000 KRW range, and on the 9th of the same month, included the Galaxy S20 series released in the first half of this year and the Galaxy S20 Plus BTS Edition in the 600,000 KRW subsidy list. These are models for which competitor SK Telecom recently raised subsidies to a maximum of 480,000 KRW just a few days ago.

This is interpreted as a kind of inventory clearance competition amid ongoing launches of strategic smartphones in the second half of the year. Rather than intensifying cutthroat competition again by setting high subsidies for new smartphones amid the prolonged COVID-19 pandemic that has frozen overall consumption, the strategy is to maximize sales by increasing subsidies for older models targeting consumers who prioritize cost-effectiveness.

However, some concerns have been raised that if SK Telecom and LG Uplus follow KT in setting public subsidies above 600,000 KRW, cutthroat competition may break out again.

An industry insider said, "It is interpreted as an effort to clear inventory due to the launch of strategic smartphones in the second half of the year," adding, "For consumers, it will be an opportunity to purchase older models at a cheaper price." Another insider predicted, "All three carriers intend to refrain from cutthroat competition due to concerns about 5G investment burdens, and the subsidy competition will be limited to some older models with large inventory."

Meanwhile, KT set the public subsidy for the Galaxy Z Fold2 and Z Flip 5G, which begin pre-orders on the same day, at 240,000 KRW based on the highest plan.

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