In an internal communication to the employees, LG boss Kwon Bong-seok indicated major changes in his smartphone department. LG’s mobile phone division has been losing money for more than four years, making a withdrawal from the smartphone market more and more likely. LG confirms such considerations, but all possible measures are examined and nothing has been decided yet.

Decision on withdrawal is still pending LG President Kwon Bong-seok stated in a message to employees of the Group’s Mobile Communications Division that LG must make the best possible decision about the cell phone division. At the same time, however, he also appeased the employees, adding that regardless of the decision, they shouldn’t have to worry. LG wants to keep the employment relationships in principle. This could mean transferring some workers to other departments.

In response to a request from the Korea Herald newspaper, LG officially stated, “As competition in the global mobile device market is getting tougher, it is Time for LG to make an objective judgment and make the best choice. The company is considering all possible measures, including sales, takeback and downsizing of the smartphone business. ” Declining sales, increasing losses and outsourcing LG Electronics’ mobile phone division has since 2015 to struggle with steadily falling sales and operational losses. The annual turnover of the LG Mobile Communications Division fell from around 107 million euros 2015 to only 44 million euros 2019. At the same time, the operating losses increased during this period from 900. 000 Euro 2015 to almost 14, 9 million euros 2019. The LG Mobile Communications Division’s losses since 2015 have now risen to almost 37, 5 million euros totaled.

LG has braced itself against this development several times. Ende 2019 LG has announced that it intends to intensify its cooperation with ODM partners. After first and foremost entry-level phones were developed and manufactured by these external ODMs, LG also outsourced the production of mid-range smartphones in December 2020. LG continues to develop and manufacture itself only in the high-end segment and for experimental mobile phones.

Last year the company surprised with the LG Wing: The smartphone has two screens that are superimposed and can be rotated by 90 degrees. LG then presented the LG Rollable at the CES at the beginning of this year. This smartphone with a roll-up display, which can be extended from cell phone to tablet size, is to 2021 come onto the market.

The stock exchange reacts positively LG only plays one role in the global market share of smartphones subordinate role. In the Android area, Samsung and the Chinese providers Huawei, Xiaomi and Vivo currently dominate. Here, LG only achieves a market share in the low single-digit percentage range.

Market observers suspect that LG will focus on the development of innovations and the design of smartphones in the future. Production and marketing, on the other hand, could be outsourced to partners. The exchange responded positively to these reports. Since Wednesday morning, LG Electronics’ share price has risen by almost percent in just over a day.

(fds)