LG Electronics Inc. has announced plans to shut down its smartphone production operations after its search for a buyer proved futile.
The South Korean electronic giant (smartphone department) had been mired in some losses, leading to its decision to close down operations, making it the first major smartphone company to do so, according to Reuters.
LG’s exit of the smartphone market in the US will allow top phone brands like Samsung and Apple to snap up its 10 percent share in North America.
An analyst, Ko Eui-young, said, “In the United States, LG has targeted mid-priced – if not ultra-low – models and that means Samsung, which has more mid-priced product lines than Apple, will be better able to attract LG users.”
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LG Records Six-Year Losses
The electronic company’s smartphone arm recorded losses for six consecutive years amounting to $4.5 billion.
Its exit from the market will shift its focus from smartphone production to other consumer products including smart homes.
Prior to a decline in sales, the company, at its peak, was ranked behind Samsung and Apple, sitting at the third spot of the world’s largest smartphone brand.
LG has a global share of just 2 percent, shipping a total of 23 million phones in 2020, against Samsung’s 256 million units.
The target market for both LG and Samsung are consumers in search of low to mid-range smartphones, with Samsung filling up the gap that LG is set to create.
What It Means For Employees
Following the company’s decision to pull out of the smartphone market, employees, in South Korea, in the smartphone division, would be assigned to LG’s other electronic departments.
Employment decisions for employees outside South Korea will be contingent on local demands.
