Economics

In the News

Subnormal profits: LG exits the smartphone industry

Geoff Riley

5th April 2021

A decade ago the South Korean conglomerate LG looked poised to be a major global force in smartphones but they have just announced that they are exiting the industry.

LG Electronics is part of LG Corporation, the fourth-largest family-owned conglomerate in South Korea and, according to some estimates, accounts for nine percent of the country’s economy!

In 2013 LG was number three manufacturer of smartphones behind Samsung and Apple but the growing power of these two corporate giants and the emergence of competitors from China has seen LG's market share squeezed into insignificance.

The business has made losses from their smartphone operations since 2015 and theory tells us that, unless a business can make at least normal profit in the long run, then it should leave an industry and reallocate their resources elsewhere.

More here from the Guardian: LG to pull out of mobile phone market

According to a statement released by LG:

"LG’s strategic decision to exit the incredibly competitive mobile phone sector will enable the company to focus resources in growth areas such as electric vehicle components, connected devices, smart homes, robotics, artificial intelligence and business-to-business solutions, as well as platforms and services."

In the UK, drawing on data showing the market share of leading mobile device vendors in the UK in 2020, LG achieved a market share of under 0.5%.

Market share data (2020)

  • Apple: 49.88%
  • Samsung: 28.56%
  • Huawei: 9.58%
  • Sony Ericsson: 1.7%
  • Google: 1.4%
  • Motorola: 1.8%
  • LG: 0.43%

Geoff Riley

Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.

Boston House,
214 High Street,
Boston Spa,
West Yorkshire,
LS23 6AD

Tel: +44 0844 800 0085

© 2021 Tutor2u Limited. Company Reg no: 04489574. VAT reg no 816865400.