LG Electronics announced on Monday that they will be shutting down their mobile division – 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 percent share in North America, where it is the No. 3 brand, to be gobbled up by smartphone titans Apple and Samsung Electronics.
The division has logged nearly six years of losses totalling some $4.5 billion (approximately R67.5 billion), and 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.
At the stage its global share is only about 2 percent. It shipped 23 million phones last year which compares with 256 million for Samsung, according to research provider Counterpoint.
Apart from North America, it does have a sizeable presence in Latin America, where it ranks as the No. 5 brand.
“In South America, Samsung and Chinese companies such as Oppo, Vivo, and Xiaomi are expected to benefit in the low to mid-end segment,” said Park Sung-soon, an analyst at Cape Investment & Securities.
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 smartphone division accounts for about 7 percent of revenue is expected to be shut down by the 31st of July.
In South Korea, the division’s employees will be moved to other LG Electronics businesses and affiliates while elsewhere decisions on employment will be made at the local level.
LG will still provide service support and software updates for customers of existing mobile products for a period of time which will vary by region.