On Monday, LG announced it would shut down its mobile phone business to focus resources on more profitable areas, such as producing electric car parts. The company, which plans to make an exit by the end of July, promises to provide service support and software updates for its existing customers for a period of time that will vary depending on the region.

LG’s decision was dictated by high competition in the mobile phone sector. It remains unknown how many jobs will be affected by this shift. The South Korean manufacturer has wide-ranging interests, from producing petrochemicals to sponsoring baseball and basketball teams. However, the main growth areas LG aims to focus on following the exit are home devices, robotics, and artificial intelligence. The company’s subsidiary, LG Chem, is one of the world’s largest suppliers of the battery cells for electric cars. Additionally, LG produces other parts, such as touchscreen displays to be used on car dashboards.

With this announcement that marks the end of an era, LG joins other manufacturers which also stopped producing handsets, including Blackberry, HTC, and Nokia. Although they sold the intellectual property, phones are still released under all three brands. LG said it may continue to sell mobile phones after 31 July as well.

LG had been producing mobile phones for nearly a quarter of a century. Back in 2013, the South Korean company was actually the third-largest phone manufacturer in the world, according to Reuters. However, in recent years, LG’s position on the market weakened due to unfavorable reviews of its phones. Perhaps its most questionable release was the “banana phone” featuring a curved screen that failed to win customers over. At one point, the company even faced legal action over software problems that made certain devices unusable. LG’s smartphone division has incurred losses over six consecutive years, amounting to approximately $4.5bn (£3.3bn) in total, based on calculations made by Reuters.

According to data from Counterpoint, a research firm, LG’s sales of 23 million phones translated to a 2% global market share in 2020. By comparison, Apple and Samsung had 21% and 18% of the mobile phone market, respectively. However, LG remains a major player in consumer electronics, including television sales, accounting for around 16% of the global TV market last year.

In addition to its major growth areas, the company will also work on developing mobile technology related to electric vehicles. As autonomous driving capabilities become more advanced, the expected rollout of 6G networks enabling even faster data transfer to and from vehicles could uncover a burgeoning market opportunity for the South Korean manufacturer.

Source: The Guardian