LG Electronics Inc. is closing its loss-making mobile communications unit in an effort to streamline operations and focus on future projects such as electric vehicle components.
The company will end the production and sale of mobile phone products on July 31 to focus its resources on growth areas such as electric vehicles, smart homes, robotics and artificial intelligence, he said. he said in a statement.declaration. Phones accounted for 8.2% of LG’s sales last year and there will be a short-term loss of revenue, but the company expects that closing be financially supportive in the long run. It will strengthen its auto parts business and continue to develop mobile technologies such as sixth generation networks and cameras, he said.
Shares rose 4.1% on the announcement. AffiliateLG Display Co. also climbed to 6.3%.
LG was one of the pioneers of the Android operating system, collaborating withAlphabet Inc.’s Google on the Nexus line of smartphones and producing some of the best camera and display tech from the early days of the category. In the United States, the company is third behindIPhone from Apple Inc. and its fellow South Korean giantSamsung Electronics Co., but it hasn’t been competitive for years and Chinese upstart OnePlus has since replaced it amid a loss of global market share to foreign rivals.
The company said in January that it would reconsider the direction of its smartphone business, after promising earlier that month that it would sell aroll-up phone this year. The company held talks on a potential sale, but negotiations broke down due to large differences in the valuation of technology patents, according to local authorities. media reports.
LG has developed its vehicle components business and has partnered withMagna International Inc. for a joint venture to manufacture key parts for electric vehicles. Shares of the Seoul-based electronics maker have climbed more than 30% since the announcement, fueled by hopes the collaboration could help Apple’s EV project. LG’s expertise in developing mobile technology can help its automotive offerings, as withdetect user intention, drowsiness or gestural interactions.
What Bloomberg Intelligence says
LG Electronics could position itself as a provider of component solutions for electric vehicles, increasing its appeal with tech giants such as Apple, as well as traditional automakers aspiring to make “ smart ” electric vehicles. The reduction in losses at its vehicle components unit to 2 billion won in the last quarter is a sign that it is on track for a turnaround.
– Kevin Kim and Catherine Lim, BI analysts
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Although Apple has not confirmed that it is working on a car project, Magna CEO Swamy Kotagiri publicly said his company was ready to build an Apple car at a recent industry forum. , according to a Pulse News. report.
(Updates with share transfer and more details from LG from the second paragraph)
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