This, like the latest news about LG phones, is not related to any new launch. After years of bad times and not finding a buyer to save the future of this division, the South Korean company decided to end its participation in this area of activity.
The closure of LG’s mobile phone unit was announced today, through a release posted on their website.
The decision was communicated earlier today by the company, after its board of directors made this decision in the city of Sel, its base of operations. The definitive cessation of activities is dated July 31.
In the note they note that this decision enable the company to focus resources on growth areas such as electric vehicle components, connected devices, smart homes, robotics, artificial intelligence and business-to-business solutions, as well as platforms and services.
That statement also indicates that the current inventory of devices on the market will continue to be marketed normally. In the same way, they ensured that all the brand’s devices will continue to receive updates and support in the committed periods.
It is evident that for several years LG has occupied a discreet place in the mobile market, despite having presented new launches in the last time.
For this 2021, the South Korean technology brand had on the agenda the launch of the successor to the LG Velvet, presented last year. However, these plans were previously suspended as a result of this crisis.
During the last five years, LG’s mobile division has experienced significant losses consecutively, which have subjected the sustainability of this branch of its business to a progressive decline.
The put option fails, forcing the closure of the division
According to a report issued in March by BloombergLG Electronics tried to sell its mobile division to two major potential buyers: the German company Volkswagen AG, world famous for its cars, and the Vietnamese conglomerate Vingroup JSC, to no avail.
Despite the uncompetitive commercial position of LG mobiles, for the company it continued to be a historic division for the company, which is why it was tried until the last circumstances to finalize its sale, to keep it running.
At the beginning of the year, the president of LG Electronics, Kwon Bong-seok, indicated through an email addressed to his employees that he was keeping all possibilities open and observing the direction of business operation closely, contemplating since then the divestment and liquidation options as a solution to the problem.
When the closure of this division of LG it was still imminent, began to establish itself as a topic of general interest to the economics and technology press tribunes. In South Korea, an LG official pointed to the Korean media Donga what LG Electronics’ smartphone business has a global market share of around 1%, making it difficult to find buyers for high values, even considering the South Korean and North American markets with a remaining fan base.
Hong Seok-ho, the company’s business official, stated that LG Electronics’ biggest concern will be to define what kind of business the company built will be able to fill this gap and re-occupy a space in the global market, after eliminating the smartphone business, which played an important role in growth. LG Electronics as a global company.
Another aspect of this crisis, known weeks ago, were LG Electronics’ plans to keep the jobs in its workforce in this unit, relocating them to other subsidiaries of the company with high demand for employment, such as LG Energy Solutions, Life Transition and Automotive Parts. .
Projects submitted in advance, such as the LG RollableUnfortunately, they will not see the light of day, given the withdrawal of this brand from an increasingly dynamic, complex and varied mobile phone market.