The LG Mobile phones will soon go into history as the globally reputed LG Electronics has on Monday announced that it will be withdrawing from the production of mobile phones. The development has come when the intense competition of mobile phones had sparked the emergence of new brands and pushing some brands to descend in the race.
LG Electronics was in the mobile business for the past two decades and it had been one of the globally recognized brands. On Monday, the South Korean company has announced that it has decided to shut down the production of mobile phones. The company has said in its regulatory filing that its mobile communications unit will no longer produce and sell handsets after July 31.
The company has said that the recent plunge and intense competition in the industry as the reasons behind the decision. According to reports, the announcement has come two months after the company said that its mobile communication unit is open to all possibilities for its future operations. The company said its exit from the mobile business will lead to a plunge in revenue in the short term but will eventually improve its financial status and management efficiency in the longer period.
LG's mobile business has already been plummeting since the second quarter of 2015. Its accumulated operating losses reached 5 trillion last year and it was one of the global brands that adversely got affected by the COVID-19 pandemic.
LG was the world's third-largest handset maker once and after a drastic plunge, the company had been in talks with Volkswagen of Germany and Vingroup of Vietnam to sell the mobile business. However, the talks had failed, pushing the company to shut down its mobile business.
According to market researcher Counterpoint Research, LG was the world's ninth-largest smartphone vendor with a market share of 2 percent after shipping 24.7 million smartphones last year, which was a 13% decrease in its preceding year. The market analysts have said that LG's operating profit would jump up by 1 trillion won if it shuts down its mobile business.
The reports say that LG had last year launched the Explorer Project, its new mobile category to boost its premium smartphone sales. However, the sales had deeply disappointed the company as several contending smartphones have come to the market. The decision of shutting down the production of mobiles has come weeks after scrapping the scheduled launch of its smartphone with a rollable OLED display.