LG announced Monday it will officially exit the global smartphone business. The company said it may conduct layoffs and close manufacturing facilities as a result of the move, which it expects to complete by July.
The move isn't entirely a surprise. LG's mobile phone business has been struggling for years. Indeed, research and consulting firm IDC estimates LG was the world's fifth-largest smartphone vendor in 2013 with a 5% share, a figure that fell to 2% by last year when LG was the world's tenth-largest smartphone vendor.
As a result of those declines, it's been rumored for months that LG would either offload the business or shut it down. According to Reuters, LG failed to close a deal with Vietnam's Vingroup to sell its mobile phone business.
LG's exit from the smartphone industry will only affect a handful of countries. As noted by IDC analyst Bryan Ma, fully half of LG's phone business – which represents just 7% of its overall revenues – is based in the US. The company's other two main phone markets are Brazil and Korea, where the company is also a relatively small player.
In the US, LG trails only Apple and Samsung in market share. However, its primary business in the US centers on phones that cost less than $400.
As a result, according to IDC's Ma, companies like Samsung, Lenovo's Motorola and TCL will likely work to capture the 10% market share LG will walk away from in the US market.
Network operators in LG's markets will be left to fill in the gaps in their phone portfolios left by the company's departure. An AT&T representative told Cnet that the company will "continue to support those using LG devices on our network as LG makes this transition" and that it will "work closely with LG to determine next steps."
An LG representative didn't respond to Cnet questions about how long it will support its US-based customers.
LG is the latest company to walk away from the phone business, following in the footsteps of vendors ranging from Amazon to Nokia to BlackBerry.
In a statement, LG said the closure of its phone business will allow it to "focus resources in growth areas such as electric vehicle components, connected devices, smart homes, robotics, artificial intelligence and business-to-business solutions, as well as platforms and services."
However, LG suggested it may not be exiting the wireless industry completely. "Moving forward, LG will continue to leverage its mobile expertise and develop mobility-related technologies such as 6G to help further strengthen competitiveness in other business areas," the company said. "Core technologies developed during the two decades of LG's mobile business operations will also be retained and applied to existing and future products."
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