New report suggests LG could (partially) exit smartphone market
UPDATE: Business Korea has corroborated earlier reports about Vietnam-based Vingroup's bid for LG's smartphone business. The original story continues below.
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LG’s Mobile Communications division has reported 23 consecutive quarters of losses and, despite recent improvements, a complete shutdown was said to be on the table last week.
Those rumors were quickly rebuffed by the brand when contacted for a comment, but now additional reports suggest LG does indeed have some important changes in the pipeline for its business.
Five companies have submitted bids for LG's smartphone business
In a statement sent to staff this morning, Reuters and Korea Herald quote LG CEO Brian Kwon as saying the following:
In the global market, competition in the mobile business including smartphones has gotten fiercer. LG Electronics believes we have reached the point where we need to make the best decision about our mobile phone business, considering current and future competitiveness. Regardless of any change in the direction of the smartphone business operation, the employment will be maintained, so there is no need to worry. The company is considering all possible measures, including sale, withdrawal and downsizing of the smartphone business.
The letter seems to indicate that all options are on the table for LG's smartphone business at the moment. Other companies are aware of the situation and have started bidding for LG's lagging division, per reports.
Analyst Ross Young and tipster Black Crypt claim the leading bidder at the current stage is Vietnam-based Vingroup, which sells smartphones under the VinSmart brand. But automaker Volkswagen is a close contender too because of potential synergies related to the electrical equipment business.
Other companies open to purchasing the LG smartphone business are Facebook, which has been accused of running a monopoly, and Google, the creator of Android and the previous owner of Motorola.
Display manufacturer BOE, who could be the supplier of flexible OLED displays for the upcoming LG Rollable, is said to be interested too.
If LG chooses this path, an announcement of the sale is expected in March and the deal would include all divisions except for two international branches, although these haven't been specified. After that, the reports claim LG itself will only create and sell one smartphone each year. The other devices on sale will simply be ODM devices with an LG badge.
Rather than selling its business, LG may simply exit the flagship segment
Devices in the premium segment, more commonly known as flagships, include the LG Velvet and LG Wing, as well as older devices like the LG V60 ThinQ and LG G8X ThinQ. The upcoming LG Rollable presumably falls in that category too, so whether its launch will go ahead as planned or not remains to be seen.
When PhoneArena contacted LG for a statement on the matter of exiting the premium smartphone segment, LG said the following:
LG Electronics management is committed to making whatever decision is necessary to resolve its mobile business challenges in 2021. As of today, nothing has been finalized.
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