[LG Phone Withdrawal] "Will Zero-Won Phones Flood the Market?" Fare Phone Already Out... LG Phone Final Stock Clearance

LG Velvet (LG VELVET) [Image source=Yonhap News]

[Asia Economy Reporter Joselgina] "Will zero-won phones flood the market?"

As LG Electronics officially announced its withdrawal from the smartphone business, the three major mobile carriers and distribution channels are now faced with the challenge of "clearing LG phone inventory." It is expected that not only zero-won phones but also "fare phones"?phones sold with additional incentives?will flood the market.

According to industry sources on the 6th, the three carriers are considering further expanding marketing support for LG Electronics' latest smartphones following the company's exit from the mobile business.

An official from one carrier explained, "We have been preparing related measures even before the official withdrawal announcement," adding, "We are reviewing inventory clearance plans." Another carrier official said, "We have been clearing some inventory since the beginning of the year," and added, "For the remaining stock, we will continue marketing support depending on market conditions." Earlier, during January and February when rumors of LG's withdrawal spread, the three carriers significantly increased official subsidies for key models including the LG Wing, effectively starting inventory clearance in preparation for the exit.

Looking at the official subsidy status for major 5G smartphones from the three carriers as of the previous day, the maximum official subsidy for the V50 (730,000 KRW) is already close to the retail price (varies by carrier from 899,800 to 752,000 KRW). Including additional subsidies from distribution channels (15% of the official subsidy), some carriers offer the phone at a level where it can be purchased as a "zero-won phone" or "fare phone."

The official subsidy for the LG Q92 is also up to 420,000 KRW, and with additional subsidies included, the actual purchase price is only 16,400 KRW. Some distribution channels even list it as a zero-won phone under conditions such as subscribing to additional services. The LG Velvet, released last year, is effectively being sold as a zero-won phone mainly through budget carriers since early this year. There are expectations that official subsidies could be further increased even for the three major carriers where the current actual purchase price is in the 200,000 KRW range.

Another latest flagship smartphone, the LG Wing, also saw official subsidies raised up to 600,000 KRW by SK Telecom and LG Uplus earlier this year, making it available for purchase around 400,000 to 500,000 KRW.

An official from a sales outlet located in Yeongdeungpo-gu, Seoul, said, "We have already been clearing inventory due to concerns about the withdrawal," and added, "Since production is confirmed until May, there is a possibility that device subsidies will increase further as a final inventory clearance." Official subsidies are jointly borne by carriers and manufacturers, but the exact burden each party carries is not disclosed. Additional subsidies from distribution channels amount to 15% of the official subsidy.

If carriers further expand marketing support, LG Electronics smartphone inventory is expected to be rapidly depleted. Accordingly, it is anticipated that the days to see LG phones at frontline sales outlets are limited.

Alongside this, companies like Samsung Electronics and Xiaomi, aiming to fill the gap left by LG phones, are expected to expand their zero-won phone campaigns mainly focusing on mid-range smartphones. A representative example is the Galaxy A42, which has a retail price of 449,900 KRW and saw its official subsidy significantly increased, dropping its lowest actual purchase price to zero within less than a month of release. Chinese Xiaomi also lowered the retail price of the Redmi Note 10 and increased official subsidies, offering it at zero actual purchase price.

According to market research firm Counterpoint Research, LG Electronics held a 13% share of the domestic smartphone market last year.

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