Tech giant LG Electronics is readying to make “cold judgement” on its smartphone business with a buyer now emerging, following 22 loss-making quarters in a row for the struggling division.
According to the Korea Herald, the South Korean tech giant sent a memo to its employees recently telling them to prepare for significant changes in its smartphone division.
“Regardless of any change...the employment will be maintained, so there’s no need to worry,” LG chief executive Kwon Bong-seok said in the memo.
An LG spokesperson told the paper that the company is considering a range of options.
“Since the competition in the global market for mobile devices is getting fiercer, it is about time for LG to make a cold judgement and the best choice,” the LG spokesperson said.
“The company is considering all possible measures, including sale, withdrawal and downsizing of the smartphone business.”
LG’s smartphone business has accumulated a loss of $5.8 billion ($US4.5 billion) in the last five years, with only 6.5 million smartphones shipped in the third quarter of 2020, down from 7.2 million. This accounts for 2 per cent of the global share of smartphone sales.
LG has struggled to compete with the smartphone giants around the world, and its phones division’s history of losses is in contrast to most of its other areas of business.
In a statement made to The Verge, an LG spokesperson said that no deal has been reached yet.
“LG Electronics management is committed to making whatever decision is necessary to resolve its mobile business challenges in 2021,” the spokesperson said.
“As of today, nothing has been finalised.”
According to BusinessKorea, Vietnamese conglomerate VinGroup Co has emerged as a potential buyer of LG’s smartphone division after having made an attractive offer.
VinGroup Co has a large portfolio of businesses in a range of industries, including real estate, cars, hotels, smartphones and land development. The company already produces LG smartphones under an original design manufacturing contract and is the third biggest smartphone manufacturer in Vietnam, behind Samsung and Oppo.
The company has a market capitalisation of $US16.5 billion as of the end of last year, accounting for 14 per cent of Vietnam’s listed company’s total market cap.
The proposed deal would see VinGroup taking over LG’s smartphone business in the US, with the South Korea tech firm now reportedly looking to sell it “piece by piece”.
It comes just weeks after LG unveiled a new “rollable” phone at the CES 2021 tech conference, with reports it will hit the market in September. The fate of this device is now up in the air, with the Korea Herald reported that there are no current launch plans.
The proposed rollable phone includes a “unique resizable screen” that transforms the phone into a small tablet, with the screen sliding in and out of place to make the surface area larger.