LG set to abandon smartphone business after leaked memo hinted change

The company spent billions of dollars only to lose market share, and looks finally ready to give up.

A leaked internal memo from the CEO of Korean electronics manufacturer LG has indicated the company plans to change “the direction” of its smartphone business, where it has lost billions of dollars and market share as part of a failed bid to make its devices more popular.

LG CEO Brian Kwon promised his staff none of them would be losing their jobs as a result of any adjustment.

“Regardless of any change in the direction of the smartphone business operation, the employment will be maintained, so there is no need to worry,” he said in the leaked memo obtained by The Korea Herald.

LG CEO Brian Kwon was formerly head of the mobile communications division.

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An LG official is also quoted as saying “competition in the global market for mobile devices is getting fiercer, it is about time for LG to make a cold judgment and the best choice”.

“The company is considering all possible measures, including sale, withdrawal and downsizing of the smartphone business,” the spokesperson said.

LG’s smartphone division has lost around $A5.85 billion over the last half a decade.

Mr Kwon vowed to turn the business around after becoming CEO last year, but its possible the coronavirus pandemic has presented challenges he can’t see a way through.

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LG has competed in smartphones since the beginning but has had little penetration in the market.

LG currently has no “flagship” device, selling the closer to mid-range LG Velvet and a handful of bargain priced phones in Australia.

At the Consumer Electronics Show 2021 the company further teased a rollable smartphone, of which little else is known.

The global smartphone market is dominated by Samsung, Apple and Huawei, with LG snaring less than 3 per cent of the market.

An LG representative told tech site The Vergethat “LG Electronics management is committed to making whatever decision is necessary to resolve its mobile business challenges in 2021 … as of today, nothing has been finalised.”

In a statement to news.com.au, an LG spokesperson initially said reports “regarding closure of LG’s mobile business is based on old, unfounded rumours and speculation that have no basis in fact.”

In a later statement, the spokesperson added: “LG Electronics management is committed to resolving business challenges in 2021.

“We will share an update when more information is available.”