LG Electronics (KS: 066570 ), at the time one of the largest manufacturers of mobile phones, announced today that it stops manufacturing these devices due to the growing competitiveness of the sector and after this branch of business has generated a deficit in the last five years.
The South Korean company made the decision public, approved this Monday by its board of directors, through a communication to the South Korean stock market regulator.
In a subsequent statement sent to the media, the company explained that it is leaving the “incredibly competitive mobile phone sector” to focus its resources on areas where it sees growth potential such as components for electric vehicles, 6G technology, robotics, home automation or artificial intelligence.
The company also indicated that its currently available inventory will remain for sale and that “LG will provide service support and software updates for customers of existing mobile products for a period of time that will vary by region.”
LG expects “the liquidation of the mobile phone business to be completed by July 31, although inventories of some existing models may still be available after that date.”
“LG will work closely with suppliers and partners throughout the process of winding down our mobile phone business. Details regarding templates will be determined locally,” it added in the statement.
Looking ahead, the Seoul-based company promised to continue to make use of “core technologies developed over two decades of mobile business operations” to apply them to “existing and future products.”
The decision comes after the company pointed out in its last presentation of results in January that the future of this division, in the red since the second quarter of 2015 and with accumulated losses of about 5 trillion won (about 4,434 million dollars), was open to “any possibility”.
LG, which at the beginning of the last decade became the world’s third largest mobile phone manufacturer only behind Samsung (KS: 005930 ) and Apple (NASDAQ: AAPL ), was currently in ninth position, with just 2% market share. global market, according to the consulting firm Counterpoint Research.