LG’s latest financial report shows why they had to stop making smartphones
LG recently left the smartphone market, and while many in the tech community were saddened to see one of the most iconic Android OEMs go away at its worst moment, it was also a long time coming, as LG smartphones have been consistently generating losses for LG even though they’ve tried everything to turn the situation around. The phone maker that put out hits such as the Nexus 5 and the LG G2 wasn’t the same anymore, and LG’s phone division was in a permanent downhill. With LG even attempting and failing to sell off their business, closing shop was imminent. Now, we have an even bigger picture of why that is thanks to LG publishing their Q1 2021 results.
And, well, the results speak for themselves. Through the first quarter of 2021, their device sales actually managed to increase through all of their other branches, except for—you guessed it—their smartphone division (via GSMArena). Now, these numbers don’t actually reflect the moment they announced their very public drop out of the smartphone market. But LG apparently managed to sell KRW998.7 billion (~$901 million USD) worth of phones through Q1 2021, which is roughly the same amount as they sold last year. However, their losses amounted to KRW280 billion (~$252 million USD). By contrast, all other LG divisions managed to increase their revenue considerably, putting their total revenue at KRW18.8 trillion.
There are a few takeaways from these numbers, but let’s start with the most obvious one: making phones is just not worth the effort anymore for them. Through 2020, LG sought to revitalize their brand by introducing new devices and smartphone lines unlike anything else we’ve seen from them so far. Given how their Q1 2020 and Q1 2021 numbers are the exact same, it’s probably safe to say that didn’t work out. On the contrary: their other divisions actually grew in revenue, which puts the smartphone division’s numbers into even further shame.
LG is set to sunset their smartphone division completely by the end of July, redeploying all of their personnel through the corporation and liquidating their assets. Right now, they’re still selling smartphones, although it’s the models that are already on the market. We’ll probably want to keep an eye on LG’s numbers for Q2 2021, which will be the last trimester to include data from their smartphone division.