After years of creating smartphones running everything from Adobe Flash and Windows Mobile-based operating systems to Symbian and Android, LG is exiting the smartphone business in 2021, with July 31 marking the official end date. The company has made several interesting and popular smartphones. For example, the company launched LG Prada in 2006, which introduced Apple’s iPhone to the market as the first smartphone with a capacitive screen, which is a big deal considering other smartphones had resistive screens or lacked a touchscreen. Similarly, the LG G3, an Android-powered smartphone, has sold more than 10 million units worldwide, the most for any LG smartphone.
However, despite being the third largest smartphone maker in North America with around 10% market share, the company only has 2% globally and is the ninth largest smartphone maker in 2020. According to Counterpoint Research, it sold only 7.6 million smartphones in the fourth quarter of 2020, less than a tenth of Apple’s 81.9 million, and significantly lower than Samsung and Xiaomi’s 62.5 million and 43 million. respectively. It was a real downfall for the South Korean tech giant. As smartphone shipments declined, so did its profits. As of 2021, LG’s mobile division had posted losses for nearly six years, totaling around $4.5 billion, according to Reuters.
LG faces intense competition
With such low numbers and continued losses, it’s no surprise that LG thought it was time to throw in the towel. After all, it was doing business with Apple and Samsung in the high-end and mid-range segments, while Chinese smartphone brands, like Xiaomi, Oppo and Vivo, were undercutting it in the entry-level segment. More importantly, LG’s mobile division was the smallest in the LG group of companies as a whole, with just 7% revenue contribution, which probably didn’t help it score any points. The company is reportedly trying to sell part of its business to Vietnamese group Vingroup, mainly recognized for its Vinfast EV brand outside its home market. However, no deal was reached and LG decided it was better to focus on other technologies.
“LG’s strategic decision to exit the incredibly competitive mobile industry will allow the company to focus its 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,” the company said in a statement at the time.
Looking back, leaving the smartphone business was a good decision for the company. The areas he wanted to focus on instead of making phones have largely gone well. By 2026, LG’s auto components division would have a massive order backlog of 90-100 trillion KRW (around $75 billion), which ensures that there will be no revenue issues in the coming years. B2B activities are also doing well and currently generate 36% of the company’s revenue.
