© LG Electronics
Evaluation | April 08, 2021
TrendForce’s investigations finds that LG manufactured merely 30.6 million smartphones final yr, which represented a 2.4% market share. The Korean firm took ninth place within the world rating of smartphone manufacturers by manufacturing quantity in 2020.
Firstly of this yr, LG started to contemplate both promoting or shuttering its cell phone unit. Round that very same time, it additionally suspended the R&D of latest smartphone fashions. On April 5, LG introduced the choice to fold up the cell phone unit because it was finally unable to offset consecutive years of economic losses it suffered within the smartphone market. Based mostly on the corporate’s present plan, the cell phone unit will wind down its operation by the top of July, whereas its smartphone manufacturing operations will stop by the top of 2Q21. TrendForce subsequently expects LG to occupy a decrease than 1% share within the smartphone market this yr. By the way, the situations for survival for smartphone manufacturers have additional deteriorated on account of the more and more fierce market competitors in addition to the latest and persevering with hike in element costs. Taken altogether, these developments will reinforce the pattern of the dominant manufacturers having an increasing number of market share sooner or later on the expense of the smaller manufacturers.
Relating to LG’s efficiency within the smartphone market through the latest years, the corporate spared no effort in high-end R&D, with such outcomes because the LG Wing with a rotating display screen and the LG Rollable, which, because the title suggests, incorporates a side-rolling show. The latter mannequin remained an idea and didn’t enter mass manufacturing. Regardless of its efforts, LG nonetheless continued to lag behind in gross sales compared with the opposite main manufacturers, reminiscent of Samsung and Apple. LG had a comparatively weak place within the high-end phase of the smartphone market. As for the mid-range and entry-level segments, LG couldn’t match Chinese language manufacturers by way of pricing. To optimize its value construction, LG expanded the share of system manufacturing going to ODMs. Nonetheless, this motion was too late to show issues round.
Samsung, Lenovo, and Xiaomi are more likely to profit from LG’s exit from the North and Latin American markets
LG’s smartphone enterprise has develop into unprofitable since 2Q15; and its monetary losses had been additional exacerbated after it made a gradual exit from the Chinese language market in 2016. As of 4Q20, LG’s smartphone enterprise suffered 23 consecutive quarters of economic losses, which totaled about KRW 5 trillion. Regardless of LG’s restricted market share, nonetheless, its exit from the varied regional smartphone markets will nonetheless profit its opponents in these markets, particularly, the mid-range phase in North America and Latin America. As regards to North America, LG’s market share there can be cut up amongst its Android-based opponents, together with Samsung, Lenovo (Motorola), and different in-house, personal manufacturers owned by home telecom operators. As regards to Latin America, then again, LG’s exit will extra noticeably profit Lenovo (Motorola) and Xiaomi.
Looking forward to the remainder of 2021, as vaccinations start to happen world wide, TrendForce expects the smartphone business, which fulfills a fundamental residing necessity, to make a gradual restoration as properly. Due to most of the people’s cyclical substitute demand, in addition to rising demand from rising markets, whole smartphone manufacturing stays unaffected by LG’s exit. Because of this, TrendForce maintains its smartphone manufacturing forecast of 1.36 billion models for 2021, a 9% improve YoY.