LG Officially Closing Its Mobile Phone Business

LG Electronics Inc. said on Monday it is pulling out of the mobile business after years of money-losing performance amid intensifying competition with bigger rivals.

The move is set to make it the first major smartphone brand to completely withdraw from the market as the company's mobile business has been in the red since the second quarter of 2015. Its accumulated operating losses reached $4.4 billion last year.

The South Korean tech giants said in a regulatory filing that its mobile communications (MC) unit will no longer produce and sell handsets after July 31, citing its long slump and fierce competition in the industry.

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Its decision to pull out will leave its 10 percent share in North America, where it is the number 3 brand, to be gobbled up by smartphone titans Apple Inc and Samsung Electronics.

LG had previously started looking for potential buyers for their mobile business and had been in talks with Volkswagen and Vingroup JS, but things didn't work out, leaving the board of directors with few options.

Following its decision, the company is focusing on electric vehicle components, connected devices, smart homes, robotics, artificial intelligence, and business-to-business solutions.

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"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. Core technologies developed during the two decades of LG’s mobile business operations will also be retained and applied to existing and future products," the company said in a press release.

LG said its exit from the mobile business will lead to a decline in revenue for the company in the short term but will eventually improve its financial status and management efficiency in the longer period, adding that existing inventory will remain “available for sale,” while existing phone owners will continue to get support and software updates for an unspecified “period of time which will vary by region.”

In South Korea, the division’s employees will be moved to other LG Electronics businesses and affiliates while elsewhere decisions on employment will be made at the local level.