LG Electronics Weighs Smartphone Withdrawal... Will It Speak at Today's General Meeting?

[Image source=Yonhap News]

[Asia Economy Reporter Seulgina Jo] As LG Electronics faces difficulties in negotiations to sell its smartphone business and is expected to eventually withdraw from the sector, industry attention is focused on the shareholders' meeting scheduled for the 24th. LG Electronics plans to decide and officially announce its 'direction' as early as this month.

LG Electronics will hold its regular shareholders' meeting on the morning of the 24th at the LG Twin Towers located in Yeouido, Seoul. Although the main agenda does not include matters related to the MC division, it is expected that shareholders will ask questions and management will provide answers regarding the operational direction of the smartphone business. On the 26th, the shareholders' meeting of LG Corporation will also take place. Koo Kwang-mo, the head of LG Group, is registered as the CEO of LG Corporation.

Since January 20, when Kwon Bong-seok, CEO of LG Electronics, officially announced a business review stating "all possibilities are open," no further statements have been made for over two months, which is another reason why this shareholders' meeting is attracting attention. To prevent confusion among related industries and employees, it has become a critical time for management to deliver a message outlining the business direction.

Earlier this month, LG Electronics' management conveyed to the MC Business Division that they are "working to finalize the major direction of the smartphone business by the end of this month." Even if preparations for withdrawal or sale are not completed, the direction will be decided and officially announced within this month. An explanatory session for employees will also be held on the day of the announcement. This will be followed by a board meeting early next month.

So far, LG Electronics has negotiated with Vietnamese companies and others to sell its smartphone business, but negotiations have reportedly broken down due to price differences. As the sale process has not progressed, there is growing speculation that LG Electronics will ultimately pursue a ‘complete withdrawal’ from the smartphone business. An industry insider said, "The offered prices were reportedly at a level difficult for LG Electronics to accept," adding, "Both full and partial sales seem unlikely."

The market views the possibility of maintaining the MC division as slim, given that it has posted losses for 23 consecutive quarters. In the audit report disclosed on the 4th, LG Electronics acknowledged, "Despite strenuous efforts such as launching innovative products to improve the smartphone business structure, meaningful sales growth and profitability improvement were not achieved."

Development of the 'Rainbow' project, announced as a strategic product for the first half of the year, and the next form factor 'Rollable' has also been effectively halted.

Currently, LG Electronics is internally discussing the reassignment of related personnel. Personnel reassignment is likely to proceed immediately after the business policy is finalized at the April board meeting and shared within the company. Approximately 3,700 employees belonging to the existing MC Business Division are expected to be reassigned within the first half of this year to other business divisions or affiliates such as LG Uplus, LG Energy Solution, and LG Magna e-Powertrain, which is scheduled to launch in July. In this process, LG Electronics is reportedly focusing on internalizing patents related to the smartphone business while emphasizing directions that create synergy with future businesses.

Regarding this, an LG Electronics official said, "Nothing has been decided yet," and added, "All possibilities are being considered."

Meanwhile, at the shareholders' meeting on the same day, LG Electronics has submitted an agenda item for the physical division to establish LG Magna e-Powertrain, a new corporation responsible for the electric vehicle business. After approval procedures for the joint venture, LG Magna is planned to be launched in July.

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