LG to quit making mobile phones to grow electric vehicle business
South Korean electronics maker LG said Monday it is getting out of its loss-making mobile phone business to focus on electric vehicle components, robotics, artificial intelligence and other products and services.
LG’s board approved the shift in strategy and the company expects to fully exit the mobile phone business by the end of July, it said in a statement.
LG was once the third-largest mobile phone maker but has lost market share to Chinese and other competitors.
It was still No. 3 in North America, with a 13% market share behind Apple’s 39% and Samsung’s 30% as of the third-quarter of 2020, according to Counterpoint Technology Market Research.
LG earlier said it was assessing its strategy as it reported that its sales rose 5% from a year earlier in the last quarter of 2020 but profitability declined due to sluggish sales of premium products.
LG Energy Solution announced last month it plans to invest more than $4.5 billion in its U.S. battery production business over the next four years, including plans to build at least two new plants.
The company, which is challenging its South Korean rival SK Innovation over the rights and patents on a battery design that Volkwagen of America plans to use from batteries made by SK in Georgia, also said recently it could build a factory in Georgia to manufacture batteries for electric vehicles instead of SK Innovation.
LG Chem’s wholly owned battery division, LG Energy Solution, confirmed the company had recently sent a letter to U.S. Sen. Raphael Warnock, D-Georgia, outlining potential plans for a plant in Georgia, but the company has declined to confirm the details.
“[The letter] was intended to clearly address the current situation that has been caused by SK’s misappropriation of our trade secrets as well as to alleviate concerns about jobs in Georgia,” an official at LG Energy Solution said in a statement to Reuters.
An official at SK Innovation rejected the idea of LG taking over its plant.
“LG’s statement regarding acquiring the plant does not make any sense as automakers do not allow contract and suppliers to change in a separate manner. With that being said, it’s unreasonable for LG to say it could take over the plant and replace us,” the official told Reuters.
LG Energy Solution has been in a legal feud with SK Innovation over allegations that SK stole trade secrets. The ITC sided with LG Chem in February and issued a 10-year order prohibiting most U.S. imports of SK lithium-ion batteries.
SK Innovation, which is supplying batteries for Volkswagen’s new Chattanooga-made ID.4 SUV, has lobbied the White House to overturn the ITC ruling.
For its part, LG said it was selling its phone inventory and would continue to provide services and support for various periods of time depending on where they are sold while focusing more on the growing electric vehicle market.
Details related to jobs being cut in LG’s phone business would be decided “at the local level,” the company said.