Goodbye LG, the South Korean manufacturer will stop making cell phones

The South Korean giant withdraws from the mobile market

LG became the world's third-largest cell phone maker in 2013, yet in recent years its smartphone division has struggled amid fierce competition in a market that includes Chinese manufacturers and is disadvantaged in the market. value for money.

The obstacles have been such that this Monday the company announced the definitive closure of its cell phone business around the world.

As early as January, the South Korean electronics giant said it was considering all options for the division, after registering nearly six years of losses that add up to a total of approximately US $ 4.500 billion.

The goodbye will affect all the regions in which it has a presence. Also to Latin America, its third largest market in terms of sales.

Until June 2020, LG held a 4,5% market share there, although far from the 42,5% held by the leader, Samsung.

“LG's strategic decision to exit the incredibly competitive mobile phone industry will allow the company to focus resources on growth areas such as electric vehicle components, connected devices, smart homes, robotics, artificial intelligence and business-to-business solutions, as well as as platforms and services, ”the company said in a statement.

But aside from the losses, the consultancy Counterpoint attributes this closure to the fact that "when the era of smartphones began, LG adopted Microsoft's operating system instead of Android and made a relatively late entry to Google's operating system."

That, according to experts, is a factor that would have made their cell phones lose their appeal. 

“Despite the launch of some innovative devices, such as the Wing 5G or the stylish Velvert, failed to captivate consumers, which also caused a change in strategy ”, says the consultant.

To all this we must add that LG decided to fight in the high and mid-range segment de smartphones, one of those that has more rivals and that the company itself described as "incredibly competitive".

But what will happen to my phone? will it stop working?

Google Nexus 5 was made by LG for the tech giant

The first thing to keep in mind is that the closure will not assume that no cell phone will stop working overnight and on that side, their owners can rest easy.

The brand confirmed that in the coming months will offer support to those who have a cell phone from the South Korean firm famous for its televisions and other appliances. 

“We will provide service support and updates of software for customers of existing products for a period of time that will vary according to the region, "he said in reference to the laws on valid guarantees in each country.

And although the liquidation of the mobile phone business is expected to be completed on July 31, inventory for some existing models may still be available after that date.

The smartphone business is the smallest of LG's five divisions and accounts for just 7,4% of its revenue.

Currently, its global mobile phone market share is around 2%.

LG still has a strong consumer electronics business, particularly with appliances and televisions. In fact, it is the second best-selling TV brand in the world after Samsung.

In December it launched a joint venture with automotive supplier Magna International to make key components for electric cars.

LG will focus its technology development effort on other divisions. "Moving forward, LG will continue to leverage its mobile expertise and develop mobility-related technologies, such as 6G, to help further strengthen competitiveness in other business areas," added a spokesperson.

Analysts said the South Korean rival Samsung and Chinese companies like Oppo, Vivo and Xiaomi They will probably benefit the most from LG's exit from the market.

Smartphone makers struggled during the covid-19 pandemic.

Sales were down 10% in 2020, mainly due to closures that limited store openings.

With information from the BBC and agencies

 

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