LG struggling on the smartphone market! Will LG keep the mobile business running?

- Adrian Ungureanu

2016 was a poor year for LG Electronics, specially due to sluggish smartphone business. The fiscal year was partially saved by strong sales of LG V20, which managed to fill some holes left in the company’s budget by LG G5, which despite the innovations didn’t managed to appeal to many buyers.

Korean press now reports that LG Electronics appears to be finding it difficult to turn around its money-losing smartphone business this year. Ahead of launching its flagship smartphone G6 early this year, the Korean tech giant was confident about turning around its smartphone unit during a conference call, after seeing losses for seven straight quarters.

After six months, when LG’s mobile unit posted an operating loss of 132.4 billion won (US$117 million) in the second quarter, analysts cast doubt on the recovery.

“LG will continue to reduce the losses to around 500 billion won to 600 billion won this year from last year’s 1 trillion won (~$885 million). Still, it will not be able to make a turnaround this year due to low brand value and less sales network,” said Lee Jong-wook, an analyst at Samsung Securities.

LG’s upcoming flagship smartphone V30, which is slated to debut this month, will also face tough competition against Apple’s iPhone 8 and Samsung’s note 8 in the US and Korea, which are LG’s main markets.

The Korean tech firm, however, is not likely to give up the money-losing business for the time being.

At the Consumer Electronics Show held early this year, LG Electronics Vice Chairman Jo Seong-jin said, “(The smartphone business) is something we must do despite current difficulties, due to increasingly complicated and smarter home appliances.

Even an analyst within the the LG group thinks it’s going to be real hard to compete with rivals.

“LG will find it difficult to seek a major breakthrough in the current smartphone market already dominated by Samsung and Apple and becoming saturated by Chinese rivals,” said Seo Ki-man, an analyst at LG Economic Research Institute.