South Korea’s LG Electronics Inc has become the first major smartphone brand to withdraw from the market as the company closes its loss-making mobile division after failing to find a buyer.
The brand is ranked third in North America where will leave its 10% share after pulling out.
Consequently, Samsung Electronics and Apple Inc are bound to gobble up its small share.
Ko Eui-young, an analyst at Hi Investment & Securities said, “In the United States, LG has targeted mid-priced – if not ultra-low – models and that means Samsung, which has more mid-priced product lines than Apple, will be better able to attract LG users,”
In nearly six years, the LG’s smartphone division has experienced losses of about $4.5 billion.
The company therefore intends to focus on growth areas such as electric vehicle components, connected devices and smart homes after it drops out of the fiercely competitive sector.
The company's losses in smartphone industry began when its flagship models suffered from both software and hardware mishaps which combined with slower software updates saw the brand steadily slip in favour.
Furthermore, according to analysts, the company lacked expertise in marketing compared to Chinese rivals.
The analysts added that LG plans to retain its 4G and 5G core technology patents as well as core R&D personnel, and will continue to develop communication technologies for 6G.
However, It has yet to decide whether to license out such intellectual property in the future
LG has also said that it will provide service support and software updates for customers of existing mobile products for a period of time which will vary by region.
The smallest of the company's divisions is the smartphone division which is expected to be shut down by July 31.
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