The Elec, a Korean based publication, published a report stating that LG Electronics had decided to shut down its smartphone business. The South Korea based multinational company, according to the report, had also informed its employees about this decision. Because of this step, LG is also likely to stop the development work on its rollable smartphones. Earlier, LG had claimed that it will launch the rollable smartphones this year but with this recent development, the chances of that happening is quite less.
A couple of weeks back, Ken Hong, the Head of Global Corporate Communications at LG, refuted the rumors by categorically stating that LG was definitely not shutting down its market business. “Definitely untrue, more speculation and rumors”, is what he stated. He also assured that the development of the rollable phone is on track and the product “will be launching this year”.
However, with multiple publications carrying out reports about LG exiting the smartphone market, The Bell published a report stating that LG is planning to review its overall business and put a new structure in place and shutting down its smartphone business is a part of its reorganizing plans. According to a report published by New Daily, LG is considering putting its smartphone business on sale.
The Korea Herald published a report which stated that Kwon Bong-seok sent across a memo within the company which indicated that their smartphone business might undergo a major change. Kwon also said that even if there are any changes in the operations of LG’s smartphone business, there will not be any kind of lay-off in the company.
An LG official, who chose to remain unnamed, also spoke to The Korean Herald and stated that since the competition among mobile devices is getting tougher and tougher in the market, LG is doing some rethinking as to how it should run its smartphone business. The official further stated that the company could choose to adopt a variety of measures including withdrawing from this sector, shutting down, or downsizing the business.
About the cited memo, LG told The Verve that while it is authentic, nothing has been finalized as yet. LG clarified the ambiguity surrounding the memo by telling the publication that the company had been facing many challenges with regards to its smartphone business and this year, it will take all the necessary steps to resolve them. According to News Pim, many prominent companies are trying to lure LG into selling its smartphone business to them. VinGroup, a company based in Vietnam, has been one of the highest bidders so far. It must be noted that the company has been trying to enter the U.S market with its range of smartphones for a while now. This seems to be a strategic move in that direction.
Though the reports about LG planning to sell off its smartphone have surfaced recently, this is not a very surprising piece of news. LG’s smartphone business was on a rapid decline for the last five years and had been suffering from operative losses consistently since the second quarter of 2015.
Kwon Bong-seok was sworn in as the CEO of LG Electronics after which he confidently asserted that he will lead the internal team towards making the smartphone business profitable. One could argue that Kwon has been around only for a year and has not been given enough time, the fact remains the smartphone business of the company has seen little turnaround coming it’s way. With the company still denying reports of a shutdown, there is still some chance (though remote) of LG continuing with its smartphone business.