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The future is gloomy for LG's smartphone business after another bad quarter and year

Jan 29, 2021, 9:23 AM

Adrian Diaconescu

The future is gloomy for LG's smartphone business after another bad quarter and year

According to a fairly bleak official response to rumors about LG's imminent high-end smartphone market exit, the company is keeping all options on the table, considering everything from a mobile business sale to a significant downsizing of said department and a complete withdrawal from the increasingly competitive industry dominated by Apple and Samsung.

As you're probably well aware, LG Mobile has reached this dramatic point after registering more consecutive quarterly losses than you can count on the fingers and toes of one person, with 2020 naturally proving an even more challenging year than the ones that came before it.

Overall, LG Electronics navigated the global coronavirus situation almost surprisingly well, ending the year with a record-breaking operating profit score of KRW 3.2 trillion (USD 2.85 billion) and strong total revenues of KRW 63.26 trillion (USD 56.45 billion). Of course, the tech giant's gains were primarily derived from sales of "premium home appliances" and OLED TVs, as well as vehicle component solutions.

Meanwhile, the long-struggling and perennially loss-generating LG Mobile Communications Company is reporting 2020 revenues of 5.22 trillion Korean won, down from KRW 5.97 trillion in 2019. Although Q4 sales grew slightly, from KRW 1.32 to 1.39 trillion, the division's full-year financial deficit still exceeded 750 million US dollars (KRW 841.2 billion).

Granted, that's down from over a trillion won lost by LG's smartphones during 2019, but after doing some simple math, we have the mobile business at a KRW 248.5 billion deficit in the final three months of last year alone, which is pretty bad. That's a worse score than the already poor results registered in Q1, Q2, and Q3 2020, which says a lot about the direction the company is heading in.

What's perhaps most worrying for hardcore fans of LG-made Android handsets is that the company doesn't appear to have a clear plan or any sort of expectations for the future.

This time last year, for instance, the hope was that "new mid to premium 5G smartphones and continued cost-efficiency efforts" would be able to right the slowly sinking ship eventually. That obviously hasn't happened yet, and it's starting to look like LG is done trying to compete against Apple's iPhones and Samsung's Galaxy.