LG Electronics says it will stop production and sales of its smartphone division

South Korean electronics giant LG announced on Monday that it will end the production and sales of its loss-driven smartphone division. This will make the brand the first smartphone maker to completely pull out from the market.

The move to exit the market will leave the company’s 10% share in North America, where it is currently the No. 3 smartphone brand, with Apple and Samsung preceding it. LG said the smartphone division has seen nearly six years of losses at $4.5 billion. Dropping out from the highly competitive sector will allow LG to refocus its attention to better growth areas such as electric vehicle components, smart homes, and connected devices, it said in a statement.

The LG brand also has a good presence in Latin America, where it ranks No’ 5 in the market.

“In South America, Samsung and Chinese companies such as Oppo, Vivo, and Xiaomi are expected to benefit in the low to mid-end segment,” said Park Sung-soon, an analyst at Cape Investment & Securities.

LG’s smartphones division had its own fair share of topping the market with its innovations including ultra-wide angel cameras. In 2013, LG was announced the third largest mobile manufacturer in the world, after Samsung and Apple. Going forward, its flagship models suffered from software and hardware issues, along with slower software updates which all caused the brand to drop in its standard.

The brand has also been criticized by analysts over its poor marketing strategies compared to its other Asian rivals. Counterpoint research revealed that the company’s global share is only about 2%. Last year, it shipped out only 23 million phones compared to Samsung’s 256 million products in the year.

LG’s smartphone division, the smallest of its five divisions, accounting for about 7% of its revenue, is set to be terminated by July 31. South Korean employees of the division will be transferred to other divisions and company affiliates, while decisions for workers at other locations of the division will be made at the local level.

Although production and sales will end officially, LG will still provide service support and software updates for customers that currently own LG smartphones over a period of time. This will vary by region, the company said.

“Moving forward, LG will continue to leverage its mobile expertise and develop mobility-related technologies such as 6G to help further strengthen competitiveness in other business areas,” the company said in a statement.” Core technologies developed during the two decades of LG’s mobile business operations will also be retained and applied to existing and future products.”