LG stated in a press release that 23 consecutive quarters of losses in its mobile business had totalled round 5 trillion gained ($4.5 billion) amid stiff competitors.
Shares in LG closed up 12.8%, towards an increase of 0.7% within the broader KOSPI index.
“Within the world market, competitors within the cell enterprise together with smartphones has gotten fiercer,” LG stated within the clearest signal but that it could possibly be contemplating a winding down of the troubled enterprise.
“LG Electronics believes we now have reached the purpose the place we have to make the most effective choice about our cell phone enterprise, contemplating present and future competitiveness.”
Chief Govt Brian Kwon stated the corporate deliberate to retain staff no matter what occurred to the cell unit.
Though ranked No. 3 within the world smartphone market within the first quarter of 2013 by Technique Analytics, LG was not even among the many prime seven within the third quarter of 2020 after dropping floor to Chinese language makers, analysis agency Counterpoint stated.
Analysts stated that if LG decides to wind down the cell phone enterprise, it might enhance its market capitalisation by an estimated 4 trillion gained, as greater than 5 years of cumulative losses and misallocation of assets had weighed on valuation.
Ending its cell enterprise might additionally assist LG deal with increasing in automobile components, the place it lately launched a three way partnership with automotive provider Magna Worldwide to make electrical automotive elements.
“(LG’s) cell enterprise has achieved all the things attainable to scale back price,” Ko Eui-young, an analyst at Hello Funding & Securities, stated.
“Now the corporate is at some extent the place it wants to extend gross sales by taking market share from Samsung Electronics Co Ltd and Apple Inc, however that is not seen as too possible, which makes it tough for the enterprise to enhance its loss-making state of affairs.”
Final month, LG stated it had reorganised its cell phone division to extend outsourcing of its low to mid-end smartphones, which analysts stated represented an try to chop prices.
