Rumour: LG selling smartphone business

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For a while now, rumours have been circulating in various media that LG is considering selling its loss-making smartphone branch. Those rumours have become a lot more concrete after an internal e-mail from LG CEO Kwon Bong-seok.

In response to the rumours, Kwon wrote in an email to LG employees that a sober judgement must be made to whether the company will continue with the smartphone branch while competition is becoming increasingly fierce. The e-mail is in the hands of the Korea Times.

Kwon adds that the welfare of employees comes first, regardless of what decision is ultimately made. Whatever that decision ultimately is, Kwon promises to be transparent about it.

Vingroup

Meanwhile, a potential buyer has already come forward. Vietnamese company Vingroup has made the most attractive bid for LG’s smartphone branch, according to BusinessKorea. Vingroup is active in many markets and has been selling smartphones since 2018. It does this under ODM contract with LG, so a full acquisition of the branch by this company is plausible.

How big the offer Vingroup has made is not known. It is possible that LG does not want to sell its entire smartphone branch at once, but wants to do so in parts. Vingroup is mainly said to be interested in the American branch, where LG still retained a market share of 13 percent in 2020.

Shrinking market share

In Europe, LG smartphones never really caught on. The market share in that region has hovered around 5 percent for a while, but it has been declining for years now. In 2020, LG’s market share in the smartphone market did not exceed 2 per cent. LG’s entire smartphone branch has been losing money since 2015. That was the last year the LG made a Nexus smartphone.