LG’s CEO has reportedly confirmed that the company is considering exiting the smartphone business entirely amid declining shipments and mounting losses.
Just last week, a now-deleted report from TheElec claimed that LG was considering ditching its smartphone business, a report that the company denied as “completely false”.
However, The Korean Herald is now reporting that LG CEO Kwon Bong-Seok has out a memo to staff explaining that the company might take “drastic action” to end this loss-making sector of its enterprise.
LG has seen rapidly declining smartphone shipments in recent years having struggled to compete against the likes of Apple, Samsung and Huawei, and is now believed to hold a market share of just two percent. The company has also has posted major financial shortfalls in its smartphone segment for 23 consecutive quarters, reaching a total loss of $4.5 billion.
“Regardless of any change in the direction of the smartphone business operation, the employment will be maintained, so there is no need to worry,” Bong-Seok reportedly said in the memo.
An LG official added in a statement given to The Korea Herald: “Since the 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.”
In his message to employees, Kwon also reportedly said that some of the the employees — around 60 percent — would be re-assigned to other parts of LG’s business.
LG has confirmed the authenticity of the memo to The Verge, stating: “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 finalized.”
If LG does decide to disband its smartphone division, it remains to be seen what would happen to the firm’s rollable phone. LG recently promised that the device, which was shown off at CES last week, is real and will launch in 2021.