[LG Phone Withdrawal] "0 Won Phone Appeared" Stock Clearance Movement Continues

[Asia Economy Reporter Seulgina Cho] As LG Electronics officially announces its withdrawal from the smartphone business, the three major mobile carriers and distribution channels are immediately faced with the challenge of 'clearing LG phone inventory.' Already, '0-won phones' as well as 'fare phones' that come with a bonus upon purchase are appearing one after another in the market.

LG Electronics, which announced its plan to exit the smartphone business by the end of July, has decided to support operating system (OS) upgrades for mobile phones for up to three years after the business closure so that customers can use LG phones with peace of mind. Product after-sales service (AS) will be available for at least four years.

◆ "Free LG Phones" Inventory Clearance Movement

According to industry sources on the 10th, LG Uplus raised the official subsidy for LG Electronics' LTE budget smartphone LG Q61 from a maximum of 125,000 KRW to 321,000 KRW the day before.

This is the first case of subsidy increase since LG Electronics officially announced its exit from the smartphone business. The retail price of the LG Q61 is 369,600 KRW, and when using a monthly plan in the 100,000 KRW range, the actual purchase price, reflecting the additional subsidy from the distribution channel (15% of the official subsidy), drops to as low as 450 KRW. KT also raised the official subsidy for the LG Q61 from a maximum of 153,000 KRW to 360,000 KRW earlier this month.

The three carriers have significantly increased official subsidies for major models including the LG Wing since early this year when rumors of LG's withdrawal spread, effectively starting to clear inventory in preparation for the exit. Following the business closure announcement on the 5th, they are also considering further expanding marketing support for the latest smartphones. A carrier official said, "We have been clearing some inventory since early this year," adding, "We will continue marketing support for the remaining stock depending on market conditions."

Looking at the current official subsidy status for major 5G smartphones, the highest 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, some carriers and retailers offer these phones at 0-won or as fare phones.

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 list it as a 0-won phone under conditions such as subscribing to additional services. The LG Velvet, released last year, is effectively being sold as a 0-won phone mainly through budget carriers since early this year. There are expectations that official subsidies may be further increased by 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 its official subsidy raised up to 600,000 KRW by SK Telecom and LG Uplus earlier this year, making it available for purchase in the 400,000 to 500,000 KRW range. In addition, most LTE smartphone models are already considered 0-won or fare phones at major online hubs and stores.

A sales representative at a store located in Yeongdeungpo-gu, Seoul, said, "We have already been clearing inventory due to concerns about the withdrawal," adding, "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 mobile carriers and manufacturers, but the exact burden each bears is not disclosed. Additional subsidies from distribution channels amount to 15% of the official subsidy.

◆ Samsung and Xiaomi Eyeing the Gap Left by LG Phones

If carriers further expand marketing support, LG Electronics' smartphone inventory is expected to be quickly cleared. Accordingly, it is predicted that the days to see LG phones at frontline stores are limited. According to market research firm Counterpoint Research, LG Electronics held a 13% share of the domestic smartphone market last year.

Samsung Electronics, Xiaomi, and others aiming to fill the gap left by LG phones are also expected to expand their 0-won phone campaigns mainly for mid-range smartphones. A representative example is the Galaxy A42, which has a retail price of 449,900 KRW; its official subsidy was significantly increased, and within less than a month after launch, its lowest actual purchase price dropped to 0 won.

Chinese Xiaomi also lowered the retail price of the Redmi Note 10 and increased the official subsidy, offering it at an actual purchase price of 0 won. SK Telecom set the official subsidy for the Xiaomi Redmi Note 10 Pro (retail price 319,000 KRW), released the day before, at 90,000 to 140,000 KRW.

◆ "OS Upgrades for Velvet and Wing Purchased Last Year Until 2023... AS for at Least 4 Years"

LG Electronics has extended the OS upgrade support period by one year each, from the previous two years for premium models and one year for some budget models, to three years for premium models and two years for some budget models. Accordingly, the LG Velvet and LG Wing released last year will be eligible for OS upgrades until 2023.

This measure is to ensure that customers can use LG phones with confidence even after the business closure. LG Electronics stated, "We decided to expand OS upgrade support to repay the trust of customers who believed in and purchased LG products until the end," adding, "We plan to realize customer value by taking full responsibility for after-sales service for the products sold."

The OS upgrade applies to premium and some budget models released after 2019 and will be announced on the LG Electronics website. However, it may vary depending on Google's OS distribution schedule, product performance, and product stabilization level.

LG Velvet [Image source=Yonhap News]

Globally, LG Electronics will also ensure thorough after-sales service and parts supply according to each country's standards and laws. In Korea, mobile phone after-sales service is supported for at least four years from the product's final manufacturing date. Customers using LG phones can continue to use over 120 service centers nationwide as before. Additionally, LG Electronics will maintain the LG Pay mobile payment service for at least three years after business closure.

LG Electronics, which announced its plan to withdraw from the smartphone business by the end of July, will continue producing mobile phones until the end of May to supply products promised to telecommunications operators and other partners.

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