Why LG is Shutting down its Mobile Business after 26 years

LG is a South Korean company that was one of the leading manufacturers of mobile phones. The company has maintained the No 3 position in the manufacturing of the smartphones for a very long time. The company has been finding it hard to maintain its financial position and to increase the sales of the mobile phones amid the competitors.

Recently the company has announced that it is going to shut down the mobile phone business. Let’s look at why the company has decided to shut down its mobile phone business.

Statement released by LG
Reason for the shut down
LG Failed to make its mark
Future of LG customers
Future of LG Employees
Future Plans of LG
FAQ

Statement released by LG

On 5 April 2020, LG had announced that it will shut down its mobile phone business. The South Korean firm LG had said in a statement that their Board of Directors had approved the decision to discontinue the business.

This unsurprising move from the company comes after its statement in the month of January, where LG had told that it was trying to review the direction of their smartphone business. The company has announced that it will close down its mobile business worldwide.

LG has become the latest legacy phone to exit the mobile phone making business. The company said that it will shut down its mobile phone business by the end of July.

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Reason for the shut down

The company has been struggling to compete with the global competitors such as Apple, Samsung, One Plus, and Xiaomi who dominates the mobile phone market. Apple and Samsung are the only brands that have maintained their sales over the years in this market.

Even the legacy phone brands such as Nokia and Blackberry have faced a lot of struggle and have lost their market domination. LG had failed to keep their products with the competitors and the new players are providing smartphones with better software and Operating systems at a reasonable price.

In 2007, LG was the fifth biggest smartphone maker globally. This was when the first iPhone was launched and went into sale. In the fourth quarter of 2020, LG couldn’t get ranked in the list of top whereas Huawei which is struggling because of certain US sanctions has managed to be in the fifth position.

LG Failed to make its mark

Over the past decade, it became harder to get consumer attention in mobile because of the growth of Android phones. LG had been experimenting with a lot of innovative designs in the last couple of years to attract the consumers.

LG continuously focused on two segments in the market which were high-end and mid-range smartphones. These two segments have become very competitive in the past decade because of the Chinese smartphone manufacturers such as Huawei, One Plus, Oppo, Xiaomi, and Vivo.

These companies have been releasing new models with software updates and the latest camera feature phones every often.

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Future of LG customers

LG has told that it will continue to sell the smartphones as long as their already manufactured and stored inventory is exhausted. The company also said that it will continue providing services to their existing customers such as software updates, customer support, etc. for a period of time. They said that it would differ from one particular region to another.

On the request towards the company’s US business on how long will LG provide services to US customers did not receive any reply. A representative of AT&T has told that they are aware of LG shutting down their mobile phone business and added on saying that they would continue to support the people who use LG devices on their network as LG makes this move. This step is taken by AT&T as a commitment towards their customers.

Future of LG Employees

It is said that LG will likely lay off some of their workforce. Some of them would probably be transferred to the other sectors of LG’s business. The company has a lot of employees around the world as it has phone manufacturing centers in China, Vietnam, and Brazil.

The company is trying to repurpose its manufacturing facilities to be used for the manufacture of other products. Even closure of these facilities is a possibility. They said that the status of their workforce that is involved in the phone business will be decided at their local level.

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Future Plans of LG

In the coming years, LG is planning to concentrate on leveraging their expertise in the mobile industry and to develop and work on building mobility-related technologies such as 6G to strengthen their competitiveness in various other business areas.

The company has plans to retain their core technologies that they had developed during the two decades of their mobile manufacturing business. The company is planning to apply it to their existing and future products.

The company has plans to focus more on its smart home products from smartphones. LG is one of the biggest providers of smart home products globally. The company is further planning to concentrate on electric vehicle components, Artificial Intelligence, robotics, business-to-business products, and other connected devices.

FAQ

What does LG stand for?

The company's original name was Lucky Goldstar but it has become more synonymous with the company's tag line "Life's Good".

Is LG going to stop making phones?

LG has released a statement saying that it is getting out of its mobile phone business to focus on other products and services.

Is LG is an Indian company?

No, LG is an South Korean multinational conglomerate corporation founded by Koo In-hwoi.

Conclusion

LG’s poor financial performance in their smartphone business and the information regarding it has been public for the past few years. Just like other legacy phones even LG has failed to retain in the mobile manufacturing business and to turn things around.