The encyclopedia · Product & Design · Strategic decision · 1995–2021
LG lost $4.4B in smartphones — then gave up and walked away
LG spent 26 years trying to win in mobile phones, lost billions, and finally shut the entire division in 2021.
LG Electronics · 2021-04-05
What happened
LG entered the mobile phone business in 1995 and was once among the top three global handset makers, reaching that position by 2008. But the smartphone era exposed a string of strategic failures. The G5's modular design flopped spectacularly. The G4 and V10 suffered widespread bootloop hardware failures that LG handled poorly. The company's brand was never able to command premium prices the way Samsung or Apple could.
By 2020, LG's mobile division had accumulated operating losses of 5 trillion won ($4.4 billion). The division had been unprofitable for 23 consecutive quarters. Despite launching innovative devices like the dual-screen V60 and the Wing with its swivel display, LG could not translate technical experimentation into sales. The company announced its withdrawal from the phone manufacturing industry on 5 April 2021.
The exit affected 750 workers at its South Korean handset factory who were relocated to home appliance plants. LG's mobile market share in the US had fallen to below 1% in 2020. The company that had once challenged Samsung and Apple surrendered a market it had spent 26 years trying to win.
Why it happened
- LG's smartphone strategy was a series of technical experiments that consumers never asked for. The modular G5, the swivel Wing, and the dual-screen V60 were interesting, not compelling.
- LG could not build a premium brand. Despite making quality phones, consumers perceived LG as a mid-tier brand and would not pay flagship prices. Samsung and Apple owned the premium tier.
- Quality failures like the G4 and V10 bootloop disaster destroyed consumer trust. LG's delayed and inadequate response to a known hardware defect pushed customers away.
The lesson
Technical experimentation without brand-building is a hobby, not a strategy. LG innovated its way to irrelevance because it never solved the harder problem of making consumers care.
Sources
spotted an error? The club wants to know.
More like this
VOVA VA-111: the MagSafe power bank that heats toward fire
Koons laser: a cross beam at 2.55mW, over its class, with no warning label
ABB's MS116 starter: a thermal trip that can stick when overloaded
Somewhere, someone solved the problem this company failed at. 2nd Opinion →
Comments · 0
Sign in to join the comments.