LG Electronics to Exit Mobile Phone Market After 26 Years... Withdrawal on July 31 (Comprehensive)

LG Electronics Board Resolution on the 5th
MC Division Sales Down 8.2% Company-wide
"Continuous Business Slump Amid Intensified Competition"
Company-wide Portfolio Improvement Plan

The LG Twin Towers in Yeouido, Seoul, where LG Electronics' headquarters is located, on the 2nd, as LG Electronics' exit from the smartphone business approaches. Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Cha Min-young] LG Electronics will end its mobile phone business, which it has led for 26 years since 1995, as of July 31. As competition in smartphone manufacturing intensified, LG judged that continuing the business had no meaning due to falling behind as a latecomer. Related assets and patented technologies will be utilized in future industries, and the company will also focus on adjusting its overall portfolio.

On the 5th, LG Electronics announced through a board resolution that it will cease operations of its Mobile Communications (MC) division, which operates the smartphone business. The MC division's sales amounted to 5.2171 trillion KRW in 2020, accounting for 8.2% of the company's total sales.

Recently, the premium mobile phone market has solidified into a duopoly, and major competitors have focused on the budget phone market, intensifying price competition. Amid this, LG Electronics struggled to achieve results due to insufficient response and has been reconsidering its business direction.

LG Electronics plans to streamline internal resources through selection and concentration, focusing its capabilities on core businesses where it can secure competitive advantages. At the same time, it will accelerate preparations for new businesses for future growth to improve its business structure. The accumulated assets and know-how from the mobile phone business will be used to strengthen existing business competitiveness and prepare for future ventures.

Continued Mobile Phone After-Sales Service... Discussions to Minimize Partner Losses

LG Electronics will continue producing mobile phones until the end of May to supply products promised to telecommunications operators and other clients. Furthermore, even after the mobile phone business ends, the company plans to provide sufficient after-sales service (AS) to ensure that purchasing customers and existing users do not experience inconvenience. In addition, LG will continue discussions to reasonably compensate partners and suppliers for losses resulting from the business closure.

The employment of approximately 3,700 MC division employees will be maintained. To this end, LG plans to reassign these employees by comprehensively considering their job competencies, the manpower needs of other LG Electronics business divisions, and LG affiliates. During this process, individual preferences will be prioritized to ensure effective reassignment from a long-term personal growth perspective.

LG Electronics will continue research and development (R&D) of core mobile technologies essential for future preparation even after ending the mobile phone business. Core mobile technologies such as 6th generation (6G) mobile communications, cameras, and software are capabilities needed for next-generation TVs, home appliances, automotive components, and robots, so R&D will continue centered on the Chief Technology Officer (CTO) division. In particular, LG will accelerate securing foundational 6G technologies expected to be standardized around 2025 and commercialized by 2029. This will prepare for the era of the All-Intelligent Internet of Everything (AIoE), where autonomous driving and the close, organic connection of people, objects, and spaces are realized.

Company-wide Portfolio Reorganized Around 'Automotive'

LG Electronics will improve its fundamental business structure through diversification based on qualitative growth and rapid expansion of new businesses. Especially with the upcoming era of electric and autonomous vehicles, the company is accelerating the strengthening of its automotive parts business. In July, LG plans to establish a joint venture in the electric vehicle powertrain sector with automotive parts manufacturer Magna International. In 2018, LG acquired ZKW, an Austrian premium automotive headlamp company.

Existing businesses where LG Electronics has strengths, such as home appliances and TVs, will expand into platform-, service-, and solution-based businesses grounded in customer needs and future trends. To this end, LG will attempt new and diverse business models centered on the customer contact platform LG ThinQ app, home appliance management service LG Care Solution, and solution businesses that integrate various products and technologies to provide customers with comprehensive offerings.

For new businesses, LG plans to actively consider innovative processes such as in-house ventures and company-in-company (CIC) models, as well as mergers and acquisitions (M&A) and strategic partnerships to secure capabilities.

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