Korean electronics manufacturer LG has confirmed reports that it’s considering shutting down its smartphone division. After initially denying reports by Korean outlet THELEC, LG confirmed the Korean Herald’s report of an internal memo from CEO Kwon Bong-Seok addressing the future of the smartphone division.
An LG spokesperson confirmed the reports by saying, “Since the competition in the global market for mobile devices is getting fiercer, it is about time for LG to make a cold judgment and the best choice. The company is considering all possible measures, including sale, withdrawal, and downsizing of the smartphone business.”
The electronics manufacturer has been performing well recently, out of all of the products the company offers, including audiovisual equipment, appliances, computers, and of course, smartphones, the smartphone division is the only one to have lost money over LG’s past fiscal year. It has been reported that over the past five years, LG’s smartphone division has lost an estimated $4.5 billion.
LG does not crack the top five of the smartphone global market share with Samsung holding 22.7% and Apple holding 11.8% in 2020’s third quarter. The last time LG even registered as holding a portion of the global market share was 2019’s fourth quarter with only 2%, according to statista.
In the memo distributed throughout LG, Bong-Seok said that, “Regardless of any change in the direction of the smartphone business operation, the employment will be maintained, so there is no need to worry.” This implies that completely shutting down the division is unlikely and LG is most likely looking for a suitable sales partner.
According to the Korean Herald, rumors have implied that “some 60 percent of the staff there would be moved and reassigned to other business units within the company or to other LG affiliates.”
The news of withdrawing from the market, downsizing, or outright selling the division come right after LG made a big announcement at CES 2021 involving its new smartphone with a rollable screen. LG would be the first company to launch a rollable smartphone as other manufacturers are debuting foldable smartphones. It is unknown at this time how the new developments involving the smartphone division will impact the rollout of the rollable phone.
Bong-Seok just recently took the reigns as CEO and, as recently as January 10th, said that expanding the smartphone lineup is key to rebuilding the division. In less than two weeks, that outlook seems to be shifting, which is probably not a good sign as far as the future of the division within the company is concerned. What is good, is that regardless of the moves that have yet to be made, Bong-Seok is determined to look out for his employees keep them in the company.