LG Electronics Inc of South Korea will close its mobile division market due to high losses, making it the first major smartphone brand to leave the market entirely.
LG’s smartphone division, the smallest of the company’s five divisions, with sales of about 7%, is scheduled to close on July 31.
Its exit decision will allow Samsung Electronics and Apple Inc to capture a 10% market share in North America, where it is the No. 3 brand, and its domestic competitor is expected to gain the upper hand.
In the U.S, Company mainly focuses on mid-priced smartphones. This means that Samsung, which has more middle product lines than Apple, is better able to attract LG users, ”said Ko Yui-Young, an analyst at Hi Investments & Securities.
Nearly $4.5 billion has been lost by the division. (roughly Rs. 33,010 crores) in the last six years, and exiting the highly competitive sector would enable LG to concentrate on growth areas such as electric vehicle parts, smart homes, connected devices, and, said by company in the statement.
In Its golden days, It was was first to market with a varied range of mobile phone technologies, such as ultra-wide angle cameras, and was once the world’s third-largest smartphone maker, behind only Samsung and Apple.
However, its flagship models later suffered from both software and hardware failures, which, when combined with slower software updates, caused the company to slowly fall out of favor. Analysts have also criticized the company for its lack of market experience compared to Chinese competitors.
Its global market share is currently about 2%. According to research firm Counterpoint, it shipped 23 million phones last year, compared to 256 million for Samsung.
In addition to North America, it has a good presence in Latin America, where it ranks fifth due to its No. 5 style.
In South America, Samsung and Chinese companies such as Vivo, Oppo, and Xiaomi are expected to win in the low to mid-range market,” according to analyst Park Sung-soon.
In South Korea, the divisional staff is likely to be relocated to various LG Electronics companies and associates, while elsewhere, recruitment choices are likely to be made at the initial time.
LG offers support services and upgrades programs to customers who now have mobile products on a scheduled schedule that may vary by region, he added.
During the meeting, analysts said LG will hold patents and senior R&D staff for 4G and 5G core technologies to improve 6G communication technology. He said that it has not yet decided whether the intellectual property will be leased in the future.
LG provides service support and software upgrades to customers using existing mobile products, which vary from country to country.
Negotiations to sell part of the company to Vietnam’s Vingroup fell through due to disagreements, according to sources familiar with the situation.
LG Elec shares have risen by approx. 7% since the company announced in January that it was exploring all options for the sector.