LG considers exiting smartphone business after $4.4B loss in 2020
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
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."
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."
Comments
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..
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)
You-know-who is gonna come in and say “but Google’s goal isn’t to sell them!!”
BBK, Honor, Xiaomi and Huawei are far from irrevelant.
It's a pity. If I had to opt for a non-Apple phone, I'd have picked a Sony or an LG.
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.
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)
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.
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.