LG Hopes To Make Its Smartphones Profitable By 2021

Advertisement
Advertisement

During CES 2020, LG chief executive Kwon Bong-seok said that he expects the mobile arm to become profitable by 2021.

LG's smartphone division has been operating at a loss for years.  Even the preliminary figures for Q4 2019 indicate that the troubles haven't subsided.

So, what is the company planning to do to help the mobile unit turn a profit by the end of next year? Well, Kwon gave a vague answer.

Advertisement

He says that the company will expand its portfolio. The market is already pretty competitive, so churning out more products alone will not necessarily help the vendor increase sales.

Of course, LG totally understands that. The executive said the new phones will have some wow factors to entice consumers. It's anyone's guess what those factors are as Kwon didn't go into details.

Overall, the South Korean company saw a 30.3 percent year-on-year increase in operating profit. However, the KRW98.6 billion figure is below the analyst estimates of KRW270 billion.

Advertisement

It seems like the mobile unit is dragging down the whole company. However, since other divisions like appliance and entertainment are doing well, the vendor is able to support the mobile arm.

LG's issue isn't that it doesn't make good smartphones. They are just not good enough when compared to the competition. Moreover, they are often deemed expensive.

LG has managed to reduce operating loss in recent times

In a bid to keep the mobile unit going, LG has done some corporal shakeups recently. Kwon himself replaced Jo Seong-jin as the CEO not too long ago. And these changes seem to be helping a bit.

Advertisement

In Q3 2019, the mobile unit managed to bring operating loss down significantly. This was attributed to production efficiencies and cost cuttings. The company has also moved production from South Korea to Vietnam for cost improvements.

However, a reduction in costs alone cannot resuscitate the mobile division. It will have to do a lot more to increase shipments.

The company has already confirmed work is underway on foldable phones. That being said, the manufacturer has no intention of rushing the product. Thus, we can't say when it will be launched.

Advertisement

The vendor was quick to jump the 5G bandwagon with the LG V50 ThinQ. It was one of the first 5G-ready smartphones that were available in the U.S. However, that didn't really help as 5G connectivity wasn't readily available at that time.

By the looks of it, LG mobile just needs a little push. It's already on the right trajectory and a few wise decisions can perhaps make the phones more competitive.

What we are expecting is a better display, improved camera system, and better Android skin. After all, these are some of the main things when it comes to smartphones.

Advertisement

Moreover, the competition has intensified in recent times and it's bound to get tougher. After all, the market is getting saturated.

Additionally, reports also show that device replacement cycles have lengthened. Thus, we really hope that upcoming LG phones will have a wow factor. Otherwise, reaching the ambitious goal of returning to profitability might become difficult.