LG Electronics, South Korea’s second-largest appliance firm after Samsung, is closing down its mobile phone business after the division lost billions in recent years.
The firm was once considered a pioneer of the Android operating system, collaborating with Google on the Nexus series in the early 2010s. But it has long struggled to increase sales, entering the market late and facing tough competition from emerging cheaper Chinese rivals such as Huawei.
It was regularly listed among the world’s top 10 smartphone manufacturers but according to tracker Counterpoint, the last time it recorded a global market share of three percent or more was in the second quarter of 2018. The unit has recorded losses for 23 consecutive quarters since 2015, with the cumulative deficit reaching about 5 trillion won ($4.4 billion) by the end of last year.
What do you expect…? When a business continues to run on losses, it is best to shut it down says an analyst.
However, LG said that its strategic decision to exit the incredibly competitive mobile phone sector will enable the company to focus resources in 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.
LG said that it will continue to sell the existing inventory but won’t produce new phones. LG confirmed that it will provide service support and software updates for customers of existing mobile products for a period that will vary by region. The company said that it will work collaboratively with suppliers and business partners throughout the closure of the mobile phone business.
LG mobile division failed to produce a result, they couldn’t stand the competition among major competitors in the entry-level mobile phone market, which is why it is best to shut it down.