LG considers exiting smartphone business after $4.4B loss in 2020

Posted:
in General Discussion
South Korean electronics giant and iPhone supply chain member LG is thinking about shutting down its mobile business entirely, after hints it wanted to sell the arm in January failed to result in any serious interest.

The LG V50, a dual-screen 5G smartphone
The LG V50, a dual-screen 5G smartphone


Years ago, LG was a popular smartphone producer, and was the third-largest in the world at one point. However, with the mobile arm failing to be profitable to the company for a number of years, it is keen to move on.

A January announcement had LG declare it was open to "all possibilities" for the mobile arm's future, including scaling it back or selling it on. It is a decision the company must take, as it has been unprofitable since 2015, and endured operating losses of nearly 5 trillion won ($4.4 billion) in 2020, according to the Korea Herald.

However, despite opening up the floor to potential acquisitions for the business, there has been little progress on that front.

"LG reportedly had talks with others over the sale of the unit but apparently there was not much progress in their negotiations," an anonymous mobile industry official explained. "It seems that selling an entire mobile business appears to be difficult at this moment, as is the partial sale of the unit."

It is claimed LG had been in talks with Vietnam's Vingroup, as well as Volkswagen, for a potential sale, but neither attempt resulted in much progress.

After two months of restructuring, analysts believe LG is probably going to close the mobile arm completely. Jobs will be safeguarded from such an action as LG previously said those working in the arm will remain employed.

It is likely that those employees will be moved over to other business areas, such as its vehicle component solutions division.

It remains to be seen whether the actions will affect LG's relationship with Apple, as it is currently a major supplier for Apple's iPhone and iPad. It is a supplier of camera modules for iPhones, and was reported to be working on a folded camera structure for a 2022 iPhone.

LG Display has also reportedly been tapped to provide mini LED displays for a rumored iPad Pro refresh, as well as a possible flexible screen for the "iPhone Fold."
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Comments

  • Reply 1 of 26
    EsquireCatsEsquireCats Posts: 1,211member
    Maybe Google can buy it, then spend 3-5 years coming to the same conclusion. Motorola, Fitbit, HTC’s R&D div... etc. 
    lkruppBeatschiaMacProCloudTalkincrossladwatto_cobra
  • Reply 2 of 26
    viclauyycviclauyyc Posts: 728member
    I wonder how can LG lost so much money in just one division in 1 year.  It sounds like they lost few hundred dollars per phone.  
    watto_cobra
  • Reply 3 of 26
    lkrupplkrupp Posts: 9,633member
    It really boils down to two, Apple and Samsung. The others are totally irrelevant, including Google’s Pixel which isn't even a blip on the sales rankings. So it wouldn’t surprise me to see some bureaucrat decide that government subsidies are needed to keep ‘competition’ alive, or to force iPhone clones into being. 
    dewmeBeatsentropysequality72521jony0watto_cobra
  • Reply 4 of 26
    mknelsonmknelson Posts: 864member
    viclauyyc said:
    I wonder how can LG lost so much money in just one division in 1 year.  It sounds like they lost few hundred dollars per phone.  
    Pretty much!

    Not too many years ago it was reported that Apple and Samsung had over 100% of the smart phone industry profits between them, meaning pretty much everybody else lost money.

    http://www.businesskorea.co.kr/news/articleView.html?idxno=55955 reported that in one quarter last year Apple and Samsung between them accounted for 99.5% of the profits but only 52.5% of the revenues..
    viclauyycwatto_cobra
  • Reply 5 of 26
    BeatsBeats Posts: 2,642member
    AWESOME NEWS!!

    I told iKnockoff morons years ago to expect companies to shut down Apple knockoff arms.

    Also, why would anyone buy that arm? It’s legal to just make your own knockoff iPhones. Even KFC (yes, that one) has a knockoff iPhone.

    I predict Sony to be next to shut down their knockoff iPhone arm. (If they already haven’t)

    lkrupp said:
    It really boils down to two, Apple and Samsung. The others are totally irrelevant, including Google’s Pixel which isn't even a blip on the sales rankings. So it wouldn’t surprise me to see some bureaucrat decide that government subsidies are needed to keep ‘competition’ alive, or to force iPhone clones into being. 

    You-know-who is gonna come in and say “but Google’s goal isn’t to sell them!!”
    edited March 22
  • Reply 6 of 26
    MacProMacPro Posts: 19,428member
    Beats said:
    AWESOME NEWS!!

    I told iKnockoff morons years ago to expect companies to shut down Apple knockoff arms.

    Also, why would anyone buy that arm? It’s legal to just make your own knockoff iPhones. Even KFC (yes, that one) has a knockoff iPhone.

    I predict Sony to be next to shut down their knockoff iPhone arm. (If they already haven’t)

    lkrupp said:
    It really boils down to two, Apple and Samsung. The others are totally irrelevant, including Google’s Pixel which isn't even a blip on the sales rankings. So it wouldn’t surprise me to see some bureaucrat decide that government subsidies are needed to keep ‘competition’ alive, or to force iPhone clones into being. 

    You-know-who is gonna come in and say “but Google’s goal isn’t to sell them!!”
    mmm... mmmm... oh, oh, I know :wink: 
    watto_cobra
  • Reply 7 of 26
    tzeshantzeshan Posts: 2,351member
    lkrupp said:
    It really boils down to two, Apple and Samsung. The others are totally irrelevant, including Google’s Pixel which isn't even a blip on the sales rankings. So it wouldn’t surprise me to see some bureaucrat decide that government subsidies are needed to keep ‘competition’ alive, or to force iPhone clones into being. 
    Consumers won't buy an expensive device that will be obsolete soon. Where will you get the service if it breaks down?
  • Reply 8 of 26
    avon b7avon b7 Posts: 5,959member
    lkrupp said:
    It really boils down to two, Apple and Samsung. The others are totally irrelevant, including Google’s Pixel which isn't even a blip on the sales rankings. So it wouldn’t surprise me to see some bureaucrat decide that government subsidies are needed to keep ‘competition’ alive, or to force iPhone clones into being. 
    Well, really it doesn't.

    BBK, Honor, Xiaomi and Huawei are far from irrevelant. 
    muthuk_vanalingam
  • Reply 9 of 26
    entropysentropys Posts: 3,200member
    Apple and a lesser extent Samsung have gone high margin which would leave room at the table in normal world. But if you aren’t buying either of those than price is the main determinant. Thus the others are in a race to the bottom of either loss making or murky Chinese business arrangements. 
    Oh, high AvonB7!!
    watto_cobra
  • Reply 10 of 26
    WgkruegerWgkrueger Posts: 347member
    Can’t they make it up in volume?
    redhotfuzzwatto_cobra
  • Reply 11 of 26
    Apparently building generic hardware to fuel Google's advertising business is about a profitable as building generic hardware to fuel Microsoft's desktop/office software business. Fools never learn.
    pscooter63Rayz2016watto_cobra
  • Reply 12 of 26
    avon b7 said:
    lkrupp said:
    It really boils down to two, Apple and Samsung. The others are totally irrelevant, including Google’s Pixel which isn't even a blip on the sales rankings. So it wouldn’t surprise me to see some bureaucrat decide that government subsidies are needed to keep ‘competition’ alive, or to force iPhone clones into being. 
    Well, really it doesn't.

    BBK, Honor, Xiaomi and Huawei are far from irrevelant. 
    If Apple and Samsung have 99.5% of the profits, where does these far from irrelevant others have? .5% basically?? So how can they survive if they only have .5% of the profits?? I must be out of this world thinking 🤔 
    tmaywatto_cobra
  • Reply 13 of 26
    Beats said:
    AWESOME NEWS!!

    I told iKnockoff morons years ago to expect companies to shut down Apple knockoff arms.

    Also, why would anyone buy that arm? It’s legal to just make your own knockoff iPhones. Even KFC (yes, that one) has a knockoff iPhone.

    I predict Sony to be next to shut down their knockoff iPhone arm. (If they already haven’t)

    lkrupp said:
    It really boils down to two, Apple and Samsung. The others are totally irrelevant, including Google’s Pixel which isn't even a blip on the sales rankings. So it wouldn’t surprise me to see some bureaucrat decide that government subsidies are needed to keep ‘competition’ alive, or to force iPhone clones into being. 

    You-know-who is gonna come in and say “but Google’s goal isn’t to sell them!!”

    That is from someone who have not seen or used LG phone at least  once. Well I switched from iPhones (two odf them) to LG and I was shocked how much Apple was behind in sound quality and screen quality comparing to G7 two years ago. Do not get me even started because you sound like ignorant. Samsung could not match few aspects of LG. Still in use today.

    And only fool cheers at competition shudown preparing to himselfnoos for neck with being closer to monopoly. I lived in '90... when we had choice... of Microsoft and Apple was nobody. That was not good and changed thank to two individuals: Steve Jobs and Linus Torvalds.
    muthuk_vanalingam
  • Reply 14 of 26
    Kuyangkoh said:
    avon b7 said:
    lkrupp said:
    It really boils down to two, Apple and Samsung. The others are totally irrelevant, including Google’s Pixel which isn't even a blip on the sales rankings. So it wouldn’t surprise me to see some bureaucrat decide that government subsidies are needed to keep ‘competition’ alive, or to force iPhone clones into being. 
    Well, really it doesn't.

    BBK, Honor, Xiaomi and Huawei are far from irrevelant. 
    If Apple and Samsung have 99.5% of the profits, where does these far from irrelevant others have? .5% basically?? So how can they survive if they only have .5% of the profits?? I must be out of this world thinking 🤔 
    So, which cave have you been living in for the last 5 years? Once you come out of it, you will get the "latest" revenue/profit data for smartphone OEMs and Avon B7's comment would make much more sense. 
  • Reply 15 of 26
    viclauyyc said:
    I wonder how can LG lost so much money in just one division in 1 year.  It sounds like they lost few hundred dollars per phone.  
    If the phones didn't even sell then they obviously lost 100s of dollars per phone. 

    It's a pity. If I had to opt for a non-Apple phone, I'd have picked a Sony or an LG. 
    watto_cobra
  • Reply 16 of 26
    avon b7avon b7 Posts: 5,959member
    Kuyangkoh said:
    avon b7 said:
    lkrupp said:
    It really boils down to two, Apple and Samsung. The others are totally irrelevant, including Google’s Pixel which isn't even a blip on the sales rankings. So it wouldn’t surprise me to see some bureaucrat decide that government subsidies are needed to keep ‘competition’ alive, or to force iPhone clones into being. 
    Well, really it doesn't.

    BBK, Honor, Xiaomi and Huawei are far from irrevelant. 
    If Apple and Samsung have 99.5% of the profits, where does these far from irrelevant others have? .5% basically?? So how can they survive if they only have .5% of the profits?? I must be out of this world thinking 🤔 
    What does the fact that they do survive, and have survived and continue to pump out some of the most cutting edge phones on the market tell you?

    What does it tell you that Apple had to totally reconstruct its two-phone per cycle at high prices business model due to years of flat sales and lagging behind on hardware?

    Obviously something relevant was happening in the wider industry.

    And amazingly, Apple (sitting in the world's second largest handset market) was shielded from the likes of Huawei because they didn't have access to that market.

    So, even with severe limitations they still raked in billions in net profit. 
  • Reply 17 of 26
    crowleycrowley Posts: 9,113member
    Shame, LG make good stuff, and aren't afraid to do something a bit weird like the Wing.  Endless candy bars gets a bit boring.
    watto_cobra
  • Reply 18 of 26
    sreesree Posts: 140member
    Kuyangkoh said:
    avon b7 said:
    lkrupp said:
    It really boils down to two, Apple and Samsung. The others are totally irrelevant, including Google’s Pixel which isn't even a blip on the sales rankings. So it wouldn’t surprise me to see some bureaucrat decide that government subsidies are needed to keep ‘competition’ alive, or to force iPhone clones into being. 
    Well, really it doesn't.

    BBK, Honor, Xiaomi and Huawei are far from irrevelant. 
    If Apple and Samsung have 99.5% of the profits, where does these far from irrelevant others have? .5% basically?? So how can they survive if they only have .5% of the profits?? I must be out of this world thinking 🤔 

    Apple and Samsung don't have 99.5% profits. In 2019 they had 84% of the smartphone market profits with about 60% of revenue. The rest of the players (like BBK, Xiaomi etc.) account for 40% revenue with 16% profits. Apple's profit share was 66% and falling YoY. 

    (2020 numbers show apple falling further, but I am not taking the 2020 numbers seriously due to the tremendous disruption caused by the pandemic)
    muthuk_vanalingamwatto_cobra
  • Reply 19 of 26
    tobiantobian Posts: 117member
    Beats said:
    AWESOME NEWS!!

    I told iKnockoff morons years ago to expect companies to shut down Apple knockoff arms.

    Also, why would anyone buy that arm? It’s legal to just make your own knockoff iPhones. Even KFC (yes, that one) has a knockoff iPhone.

    I predict Sony to be next to shut down their knockoff iPhone arm. (If they already haven’t)

    Actually, it’s Sony who can prevail.. if they will go courageous and decide to build up their own platform. I mean their store, their OS and Dev tools, entire eco-system. As we can see, Samsung is going to be winner as “Android sole hardware” - only profitable one. Because for third player to exist, it must be exclusive marketplace for developers (no android), and such can get any devs attention with it’s brand. I see Sony more oconic like Apple, than fridge maker Samsung.
    watto_cobra
  • Reply 20 of 26
    tmaytmay Posts: 5,498member
    avon b7 said:
    Kuyangkoh said:
    avon b7 said:
    lkrupp said:
    It really boils down to two, Apple and Samsung. The others are totally irrelevant, including Google’s Pixel which isn't even a blip on the sales rankings. So it wouldn’t surprise me to see some bureaucrat decide that government subsidies are needed to keep ‘competition’ alive, or to force iPhone clones into being. 
    Well, really it doesn't.

    BBK, Honor, Xiaomi and Huawei are far from irrevelant. 
    If Apple and Samsung have 99.5% of the profits, where does these far from irrelevant others have? .5% basically?? So how can they survive if they only have .5% of the profits?? I must be out of this world thinking ߤ䦡mp;nbsp;
    What does the fact that they do survive, and have survived and continue to pump out some of the most cutting edge phones on the market tell you?

    What does it tell you that Apple had to totally reconstruct its two-phone per cycle at high prices business model due to years of flat sales and lagging behind on hardware?

    Obviously something relevant was happening in the wider industry.

    And amazingly, Apple (sitting in the world's second largest handset market) was shielded from the likes of Huawei because they didn't have access to that market.

    So, even with severe limitations they still raked in billions in net profit. 
    I don't believe your meme wrt to Apple's "flat sales and lagging behind on hardware" has ever been valid, but I have to agree with you that Apple's broader sales model looks unstoppable today, with some expectations that FY2020 iPhone sales will exceed 240M units,  and may approach 250M units. More to the point, I expect that Apple will increase its profit share back to and beyond the 70% range for the year.

    Lagging behind on hardware? Seems like buyers don't agree with you, voting with their wallets, and purses, for Apple's broad ecosystem. Probably why Apple keeps building that iPhone user base, every single year.
    edited March 23 watto_cobra
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