LG Electronics announced on the 5th that "the production and sales of the mobile phone business will be terminated." LG Electronics held a board meeting this morning and decided to end the mobile phone business on July 31st.
LG Electronics said,
“We made this decision due to intensifying competition in the mobile phone business and continuous sluggish business,” and “We will focus more on our core business in the future. In addition, he added, “There may be a decrease in sales in the short term due to the end of the mobile phone business, but in the mid to long term, the business structure and financial structure are expected to improve.”
What happens to people who use LG Phones
When LG Electronics decided to end the mobile phone business, existing LG phone users are raising concerns about future software updates and support for used phone compensation programs.
LG Electronics announced that it plans to continue to provide sufficient after-sales service so that customers and existing users will not experience inconvenience even after the mobile phone business is over.
In addition, it has decided to produce mobile phones by the end of May so that it can supply the products promised to customers such as telecommunications companies.
An official from LG Electronics said,
“We will continue to discuss to compensate for the loss of business partners and partners due to the end of the business.”
Why did you decide to disband the business instead of selling it?
LG Electronics said that at the end of January, President Bong-Seok Kwon told employees,
“We are reviewing all possibilities of reducing the mobile (MC) business unit in charge of smartphones and transferring them to other business units or selling them.”
Volkswagen has negotiated a sale with Google in the US. However, since there was no acquirer that LG Electronics wanted, it decided to disband the business unit in the end.
Even if LG Electronics terminates its mobile phone business, it has decided to continue research and development of core mobile technologies for future preparation.
Core mobile technologies such as 6G mobile communications, cameras, and software are required for next-generation TVs, home appliances, electronic components, and robots, so it plans to continue R&D centered on the CTO sector.
A senior LG Electronics official said,
“Some overseas companies that have negotiated the sale went right before due diligence, but they were more interested in the patent rights held by LG Electronics than in the smartphone business itself.”
“In order to prepare for future industries such as artificial intelligence and autonomous driving, mobile-related companies “We decided that it would be beneficial to keep the patents held.”
3700 employees of the mobile phone business
LG Electronics plans to start full-fledged manpower reassignment by receiving applications for the desired work department from up to 3,700 employees of the MC division.
LG Electronics said,
"We will prioritize the will of individual employees and promote effective relocation from the perspective of long-term growth of individuals."
It is expected that the largest number of employees will be assigned to Changwon, Gyeongnam, where the home appliance factory and research center are located, and employees will also be sent to LG Group affiliates such as LG Energy Solution (electric vehicle battery) and LG Innotek (smart phone parts such as camera modules).
In the case of the smartphone business, many of the employees are research and technical workers, so it is judged that they can be absorbed inside the group without restructuring the manpower.
LG Electronics plans to convert the use of overseas smartphone factories in Vietnam, India, and Brazil, or to recycle factory subsidiary materials.
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