Report: LG To Continue Investing In Struggling Phone Unit

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LG Electronics is expected to continue investing in its struggling phone business in the coming years, several industry analysts recently said, noting how the South Korean original equipment manufacturer (OEM) still believes it cannot afford to abandon this market segment and may be able to bounce back in the near future. While the company previously projected its smartphone unit will return to the black over the course of this year, its consolidated financial report for the second quarter of 2017 is making that estimate somewhat dubious, with the division posting an operating loss of $117 million as its product portfolio continued to disappoint.

The sales of the firm's high-end devices were particularly disheartening for investors, as LG itself admitted that its premium products didn't do well in the three-month period ending June 30, indicating that not even the radical design shift introduced with the LG G6 managed to pique consumer interest. Recent reports indicate that the upcoming LG V30 flagship will adopt a bezel-less form with an 18:9 display panel that's similar to the LG G6, though it remains to be seen whether that second take on this design philosophy ends up yielding better commercial results. Lee Jong-wook of Samsung Securities doesn't see LG's smartphone business returning to profit this year, though the analyst noted how the company is still likely to continue reducing its quarterly losses which may only amount to around $439 million for the entire 2017, or half of what the firm posted last year.

Seo Ki-man of the LG Economic Research Institute agrees with that assessment, having recently said that the firm is unlikely to significantly improve its performance in the smartphone segment in the near future due to the extremely competitive state of the market. The analyst sees LG's next big opportunity in the artificial intelligence (AI) sector that the company could merge with its handset offerings more efficiently than its competitors do and win back some customers in that manner. For the time being, LG is continuing to pursue handset-related investments due to the fact that it's looking to integrate its products into various Internet of Things (IoT) devices that are currently gaining significant traction and may be a trillion dollar in less than five years, according to some estimates.

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