In the race towards the top smartphone purveyor led by Samsung and Apple, LG continues to struggle as much as the other manufacturers in the market today. With annual losses recorded consecutively in the last few years, LG's chief executive is standing firm to keep its smartphone line.
Horrible sales
LG's mobile division is gradually losing its ground in the smartphone competition due to horrible sales performances in the last few years. It recorded consecutive failures of flagship smartphones, eventually threatened by the entry of fast-growing Chinese newcomers Xiaomi and Oppo.
The South Korean phone maker is relying a fifth of its revenue on the smartphone division. In a Financial Times report, analysts have doubted that the company might not be able to redeem itself from where it is today in the race.
"It seems too late to expect a major turnround of the mobile business. In terms of earnings, it may be better for LG to just pull out of the business", says Nomura's Chris Chang. IDC's researcher Kiranjeet Kaur echoes Chang's perspective saying, "At the very top, it has become a two-legged race between Apple and Samsung, and leaves little room for anyone else to find a firm footing".
The plan
But for LG chief executive Jo Seong-jin, shutting down the mobile department is not the solution to this debacle. Jo has stressed out that LG Mobile plays an essential role in the up and coming industries of smart home and autonomous cars.
The chief executive has revealed that LG has recently established research centres to grow innovations in artificial intelligence and robotics. It, however, refused to pin down how much it invested.
In the meantime, the company is expanding its reach in supplying components to different partners while it has been seen as a major industry leader down the road with LG Chem, LG Display, and LG Innotek.
"This is where LG's future lies. It is one of the few IT companies that can provide a package solution for EV components", says Kim Young-woo of SK Securities. "It needs to look beyond smartphones to find new growth drivers".
