SEOUL (Reuters) – South Korea’s LG Electronics on Wednesday said it was considering all options for its lost-to-share mobile sector, which analysts said could lead to a loss. into closing its smartphone business or selling parts of the unit.
LG said in a statement that it had 23 consecutive quarters of losses in its mobile industry of about 5 trillion won ($ 4.5 billion) amid strong competition.
Shares in LG closed up 12.8%, against a 0.7% rise in the broader KOSPI index.
“In the global market, competition in the mobile industry involving smartphones has accelerated,” LG said in the clearest sign yet that it could consider the industry. to bring trouble.
“LG Electronics believes we have reached the point where we need to make the best decision for our mobile business, considering current and future competitiveness.”
CEO Brian Kwon said the company planned to retain employees no matter what happened to the mobile unit.
Although ranked 3rd in the global smartphone market in the first quarter of 2013 by Strategy Analytics, LG was not even among the top seven in the third quarter of 2020 after losing ground to consumers. Chinese manufacturer, research firm Counterpoint said.
Analysts said that if LG decides to wind up the mobile business, it could increase its market capitalization by an estimated 4 trillion won, given more than five years of cumulative loss and misallocation of resources valued.
Completing its mobile business could help LG focus on expanding in vehicle parts, where it recently launched a joint venture with car supplier Magna International to manufacture electric car parts.
“The mobile industry (LG) has done everything possible to reduce cost,” said Ko Eui-young, an analyst at Hi Investment & Securities.
“Now the company is at a stage where it needs to increase sales by bringing in market share from Samsung Electronics Co Ltd and Apple Inc, but that doesn’t seem too feasible, which makes it difficult for business to improve loss situation. ”
Last month, LG said it had reorganized its mobile compartment to increase the exterior of its low-to-mid-range smartphones, which analysts said represent an effort to cut costs .
(Won $ 1 = 1,100.6100)
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