SEOUL (Reuters) – South Korean LG Electronics Inc said Monday it will phase out its loss-making mobile division – a move that will make it the first major smartphone brand to withdraw from the market completely.
Due to the decision to withdraw, the 10% share of North America, where the brand is No. 3, remains swallowed up by smartphone titans Apple Inc and Samsung Electronics.
The division has suffered losses totaling about $ 4.5 billion for nearly six years, and by leaving the highly competitive industry, LG could focus on growth areas such as electric vehicle components, connected devices and smart homes, it said in a statement statement.
In better times, LG entered the market early with a number of mobile phone innovations, including ultra-wide-angle cameras, and was once the world’s third largest smartphone manufacturer in 2013 after Samsung and Apple.
Later, however, its flagship models suffered from both software and hardware problems, which, coupled with slower software updates, kept the brand steadily in favor. Analysts have also criticized the company for its lack of marketing expertise compared to its Chinese rivals.
Currently, the global share is only about 2%. It shipped 23 million phones last year, up from 256 million for Samsung, according to research provider Counterpoint.
In addition to North America, it also has a significant presence in Latin America, where it is number 5.
“In South America, Samsung and Chinese companies such as Oppo, Vivo and Xiaomi are expected to benefit in the low to mid-market segment,” said Park Sung-Soon, an analyst at Cape Investment & Securities.
While other well-known mobile brands such as Nokia, HTC and Blackberry have also fallen from lofty heights, they have yet to disappear altogether.
LG’s smartphone division – the smallest of the five divisions, accounting for about 7% of sales – is expected to be phased out on July 31.
In South Korea, the division’s employees will be transferred to other LG Electronics companies and affiliates, while elsewhere employment decisions will be made at the local level.
LG will provide service support and software updates for customers of existing mobile products for a period that may vary by region.
Talks to sell part of the business to the Vingroup in Vietnam have failed due to differences in terms, sources say.
Reporting by Joyce Lee and Heekyong Yang; Editing by Edwina Gibbs