LG may not be making phones for much longer. According to a new report from The Korea Herald, LG Electronics is considering dropping its smartphone business, with CEO Kwon Bong-seok having sent out a message to staff today hinting that there will be a major change to the company’s smartphone plans.
While LG has some die-hard fans, the move would make business sense considering the state of its smartphone lineup. According to the report, LG’s smartphone division has lost around $4.5 billion over the past five years.
“Regardless of any change in the direction of the smartphone business operation, the employment will be maintained, so there is no need to worry,” said Kwon in his message.
Another unnamed LG official noted that “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.”
According to the report, around 60% of LG’s smartphone business staff will be moved to other areas within the company. It’s unclear if the remaining 40% will be retained to work for a much smaller LG smartphone business or be let go, however, considering Kwon’s statement, the former seems more likely.
Despite the fact that LG has a few big fans, LG phones have generally failed to live up to expectations. LG phones are rarely considered the best option among their peers, and when they are, it’s usually for a niche audience, like those who want support for accessories like the Dual Screen. The company has also lagged behind the competition in developing its camera tech, which is a major consideration for most smartphone buyers these days.
Smartphone enthusiasts will point to LG’s patchy history with hardware faults, and software updates that have lagged far behind the competition. These things, combined with years of high-end phones that felt like incomplete products, have led to lackluster sales.
Kwon became CEO of LG in January 2020, vowing to turn its smartphone business around by 2021. That hasn’t really happened, and while the LG Velvet is the company’s most interesting phone in years, it still hasn’t made a real case for users to buy an LG phone over something from Samsung or Google. In December, LG announced that it would be outsourcing design and construction of some of its low-end phones to third-party manufacturers.
This doesn’t mean that LG isn’t working on innovations that could change the smartphone business. The company showed off its rollable display tech at CES 2021 — tech that was originally supposed to debut in an actual phone at some point this year. Even if a phone with the tech is released, chances are it alone won’t be enough of a sales driver to alter LG’s smartphone plans.