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LG is first major smartphone brand to pull out from market

Despite fast-rising cases and partial lockdowns in several towns and cities across the country, most states reported healthy GST collections and electricity usage numbers in March (Sanjeev Verma/HT PHOTO)Premium
Despite fast-rising cases and partial lockdowns in several towns and cities across the country, most states reported healthy GST collections and electricity usage numbers in March (Sanjeev Verma/HT PHOTO)

  • At its peak in 2013, the S. Korean firm was the world’s third-largest smartphone maker
  • LG’s flagship models suffered from both software and hardware mishaps which saw the brand steadily slip in favour

South Korea’s LG Electronics Inc. will wind down its loss-making mobile division after failing to find a buyer, a move that is set to make it the first major smartphone brand to completely withdraw from the market.

Its decision to pull out will leave its 10% share in North America, where it is the No. 3 brand, to be gobbled up by Samsung Electronics and Apple Inc. with its domestic rival expected to have the edge.

“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," said Ko Eui-young, an analyst at Hi Investment & Securities.

LG’s smartphone division has logged nearly six years of losses totalling some $4.5 billion. Dropping out of the fiercely competitive sector would allow LG to focus on growth areas such as electric vehicle components, connected devices and smart homes, it said in a statement.

In better times, LG was early to market with a number of cellphone innovations including ultra-wide angle cameras and at its peak in 2013, it was the world’s third-largest smartphone manufacturer behind Samsung and Apple.

But later, its flagship models suffered from both software and hardware mishaps which combined with slower software updates saw the brand steadily slip in favour. Analysts have also criticized the company for lack of expertise in marketing compared to Chinese rivals.

While other well-known mobile brands such as Nokia, HTC and Blackberry have also fallen from lofty heights, they have yet to disappear completely.

LG’s current global share is only about 2%. It shipped 23 million phones last year which compares with 256 million for Samsung, according to research provider Counterpoint.

In addition to North America, it does have a sizeable presence in Latin America, where it ranks as the No. 5 brand.

While rival Chinese brands such as Oppo, Vivo and Xiaomi do not have much of a presence in the US, in part due to frosty bilateral relations, their and Samsung’s low to mid-range product offerings are set to benefit from LG’s absence in Latin America, analysts said.

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