LG Electronics says it is terminating its smartphone business, which has lost money for years

South Korea group faced lack of in-house chip supply and rise of Chinese rivals — SEOUL — LG Electronics said Monday that its board decided to terminate the company's loss-making smartphone business …

Nikkei Asia 2021-04-05 Kim Jaewon

Context & Ripple Effects

LG’s exit concludes a long deterioration rather than a sudden reversal: the unit had recorded 22 consecutive quarterly losses before its outsourcing reorganization, while a later quarter brought a $181M loss as sales fell sharply. The board’s decision shows that shifting low- and mid-range production outside LG did not restore the mobile business, amid chip-supply constraints and stronger Chinese competition.

First-order effects

LG Electronics will cease operating the loss-making smartphone business, ending the division’s turnaround and outsourcing strategy.
Chinese smartphone rivals lose an established competitor whose mobile sales and profitability had been declining for years.

Second-order effects

LG’s withdrawal removes a buyer and brand from the low- and mid-range handset production model it had adopted, reducing the commercial rationale for a strategy built around outsourced phones.
The decision makes dependable in-house chip access more consequential for handset makers competing against Chinese rivals, a constraint LG identified alongside persistent losses.

Third-order effects

If other weaker handset businesses face the same combination of supply dependence and aggressive Chinese competition, smartphone manufacturing will further concentrate among companies with scale and tighter component control.

The trend: The smartphone market is increasingly rewarding manufacturers that can pair competitive device portfolios with resilient component supply, leaving persistently unprofitable brands with fewer recovery options.

Discussion

@neiltwitz Neil Shah on x
LG's market share has been declining & slipped to below 5% mark across except couple of regions. LG was too much dependent on two markets: Korea (KR) & North America (NA) The “small vacuum” to be filled by ✔️Samsung, Moto, Alcatel & newcomers (Vinsmart) in NA ✔️Samsung in KR http…
@saschasegan Sascha Segan on x
Very sad day. LG maintained its #3 position in the US but couldn't keep its head above water globally. Writing a story now. https://www.lgnewsroom.com/...
@snazzyq Quinn Nelson on x
nobody bought them but we all loved them rest in spaghetti see you at my dishwasher lifes good https://twitter.com/...
@jon4lakers Jon Rettinger on x
End of an era. From Nexus devices to the Wing, LG drive innovation forward. Going to miss their take on phones. https://twitter.com/...
@tariqkrim Tariq Krim on x
LG is exiting the smartphone business. I still believe that instead of going the Android route, they should have used their strength to launch a new Palm OS device. The world lacks a webOS phone, not another generic android device. https://asia.nikkei.com/...
@manas_muduli Manas Muduli on x
I think this is a good decision to shut down the loss making mobile division of LG. They should focus more on their core business which is selling home appliances and other B2B solutions. https://twitter.com/...
@wcchen Wayne Chen on x
LG withdraws from smartphone market. Apple and Samsung dominate but Chinese brands growing. Who remembers Nokia and Blackberry? It's a tough business. https://www.reuters.com/...
@mkbhd Marques Brownlee on x
Pour one out for LG Mobile. They're the reason we have ultrawides in every new phone right now. They didn't always ace every phone, but losing them means losing a competitor that was willing to try new things, even when they didn't work. https://twitter.com/...
@lisagade Lisa Gade on x
*sigh* bye bye LG phones. They're leaving the smartphone business. Will support existing models (how long depends on region you're in). https://lgnewsroom.com/...
@alexdobie Alex Dobie on x
LG, in some years, was actually competitive @ high end. But lack of consistency from yr to yr burned carriers. Looking back, I think the G5 was probably the biggest product disaster in terms of killing momentum that was built from G2➡️G3➡️ G4, which were actually good for the tim…
@alexdobie Alex Dobie on x
More here. Still basically a one fact story, but LG will apparently continue to support existing devices. https://www.androidcentral.com/ ...
@backlon Dieter Bohn on x
LG is done making phones. It did a lot for the industry over the years, but spent the last few just chucking weird stuff at the wall. It was fun, but not a business. https://www.theverge.com/...
@kkiyer90 Karthekayan Iyer on x
LG's biggest contribution to smartphone world is Ultra-Wide cameras and Nexus 5, which is partly responsible for pure Android success. When 6 OEMs control 80% of the market share, this was inevitable. https://twitter.com/...
@journeydan Daniel Bader on x
We knew it was coming but it's sad to see it nonetheless: LG is officially out of the phone business. https://www.lgnewsroom.com/...
@rdrv3 David Ruddock on x
this is the part where I'm supposed to share a wistful LG phone memory but I don't really have one
@charlesarthur Charles Arthur on x
Contrary position: LG never spent what was needed to get its products in front of people at carrier stores (esp v Samsung), was behind in technology (v Samsung particularly) and concentrated on flagships when the Android market shifted to low-cost good-enough models. https://twit…
@rdrv3 David Ruddock on x
LG was unable to compete with the likes of Samsung and Apple on core R&D and customer service. Its products, meanwhile, were often novel, but rarely holistically compelling. They were the Infiniti to Samsung's Lexus.
@joannastern Joanna Stern on x
News from Seoul: LG Electronics is closing its mobile business unit. Goodbye forever crazy LG phones I never recommended but always had a ton of fun reviewing. https://twitter.com/...
@pankajontech Pankaj Mishra on x
LG bled over $4.5 billion and spent six years before quitting the smartphone business. It couldn't even find a buyer for its assets When to quit sounds far more important question to answer than when (and whether) to enter a market https://www.reuters.com/...
@maxwinebach Max Weinbach on x
Well it's official. LG mobile is done. RIP https://twitter.com/...
@pierce David Pierce on x
RIP LG phones. Your ideas were funky, your software was terrible, your cameras were great, and I'd never buy you but I'm sort of sad you're gone anyway https://www.protocol.com/...
@daniel_rubino Daniel Rubino on x
The official announcement. Also, they mention “6G”, so time to start preparing https://www.lgnewsroom.com/...
@evleaks Evan Blass on x
Sad day for mobile enthusiasts. https://www.lgnewsroom.com/...
@mkbhd Marques Brownlee on x
My first ever smartphone was an LG Voyager
@tomwarren Tom Warren on x
it's official, LG is exiting the smartphone business. It's been obvious for years that it has been extremely difficult for LG to compete against Apple, Samsung, Xiaomi, and many others. LG is now closing its phone business by the end of July https://twitter.com/...
@michaelcrider Michael Crider on x
My favorite LG phone (that I can remember immediately) was the G5, the one with the bottom that slid out for a replicable battery or modular add-ons. Say what you will about support or software, LG never shied away from a new hardware design.
@ruskin147 Rory Cellan-Jones on x
LG closes its mobile phone business - big moment in an industry where Apple, Samsung and a clutch of Chinese players make money, and the rest struggle https://www.lgnewsroom.com/...
@nikkeiasia @nikkeiasia on x
LG Electronics will hang up its smartphone business, with investors welcoming the news as shares in the South Korean company rose more than 2% in Monday morning trade. https://asia.nikkei.com/...
@supersaf Safwan AhmedMia on x
Today is a sad day for Tech 😔 LG made some mistakes along the way but they brought a lot to the table and weren't afraid to try new things, whether that be Ultrawide Cameras or a Swivel Display. RIP LG Smartphones 💔 https://www.theverge.com/...
@caro1inehaskins Caroline Haskins on x
With this in mind.... an ode to my first phone.... the beautiful lg chocolate in cerulean blue https://www.lgnewsroom.com/... https://twitter.com/...
@c_davies Chris Davies on x
LG phones were often as intriguing as they were frustrating. Clever ideas mired in inexplicable decisions: an inability to commit to targeting the mainstream or playing plucky, imaginative underdog. I'll miss the weird devices (& have forgotten the rest) https://www.slashgear.com…
@moneyacademyke Moe on x
LG Electronics said Monday that its board decided to terminate the company's loss-making smartphone business The handset unit made $4.4bn in operating losses over the last six years. The wind down of the phone business is expected to be completed by the end of July -NikkeiAsia
@vladsavov Vlad Savov on x
LG is quitting the phone business, leaving only Sony alive from my 2016 Android OEM death watch. https://www.theverge.com/... https://www.bloomberg.com/...
@c_davies Chris Davies on x
I feel like the wheels came off in 2016/7, with G5 and LG's decision to abandon the modularity it had just hyped. Not so much because I liked the idea, but because it gave users/carriers/reviewers zero confidence LG would commit to something. Everything after seemed scattershot. …
@nexusben Ben Schoon on x
You hate to see it, but really this is deserved. LG gave up on being anything more than a copy of Samsung years ago https://twitter.com/...
@rdrv3 David Ruddock on x
LG's struggle underscores the immense difficulty of competing at the high end of the smartphone market, and the massive costs involved to do so (that are rarely rewarded with profit). If you aren't willing to lose money, your chances of breaking into that market are zero.
@geekyranjit Ranjit on x
Sad news but LG is getting out of the Smartphone market. It's end of a era and not good for us as consumers. But to be frank LG India smartphone divison was never that aggressive in India. https://twitter.com/...
@nirave @nirave on x
Farewell LG, you've given us some incredible times! On the phone front, you tried things that others wouldn't and you're the reason we have Ultrawide cameras on every phone right now. I'll truly miss some of your phones https://twitter.com/...
@clintonjeff Clinton Jeff on x
Dayum thats sad. Another OG gone. I feel like LG was always right up there with Samsung in terms of innovation, but they were just terrible at marketing their phones. https://twitter.com/...

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