LG shifts focus to OLED as smartphone sales remain sluggish

The Korea Herald

Despite the very vocal crowd who called Samsung’s 2015 smartphones afoul, LG’s G4 has done very little to rekindle the OEM’s sagging sales and diminishing market share. Despite the favorable interest in the new V10 – already on sale in Korea and releasing next month in the USA – the expensive flagship is unlikely to change things in the markets that matter. In light of this unfavorable situation, The Korea Times is reporting that LG will soon be restructuring: LG Display will take control of OLED lighting-related development from current owner LG Chem.

Specifically, LG Chem has indicated that “it has received approval from top LG management to sell its OLED lighting unit to LG Display on Dec. 15. The deal is worth 160 billion won, or some $142 million.”

LG Chem’s C.S. Song, head of the company’s PR division, stated that, “The latest deal will help LG Chem further strengthen its ability to handle the OLED material business as LG Display has been successful in managing OLED-embedded applications.”

Jacquelyn Park, a spokeswoman for LG Display, added that “The decision will help LG Group create synergy in the OLED business sector given LG Display’s advantage in that segment.”

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The move comes after a meeting last week where LG Chairman Koo Bon-moo “asked top management of the conglomerate’s affiliates to share patents that each of its units have” and is part of an apparent contingency plan-type strategy to step the company’s lost revenue from elsewhere in the conglomerate.

The Korea Times states that, “LG’s shift to the OLED business comes after its main affiliates suffered a ‘systematic decline’ in profit. Its key consumer electronics unit – LG Electronics – is nowhere to be seen in smartphones, hit by the rise of cheap Chinese mobile vendors. LG’s global ranking in smartphones in the second quarter was pushed outside the ‘top five’.”

Also mentioned in the piece was a stronger focus on the B2B market segment, which is expected to grow to $6.7 trillion by 2020 according to leading market research firm Frost and Sullivan.

Trouble in paradise?

This latest news development comes amid a generally tumultuous time for Korea’s big two. Just last week TrendForce reported Samsung first annual decline in Samsung smartphone shipments. LG, too, has been dealing with troubled sales, and has already been focusing on OLED products.

As the Times mentioned, this is largely seen as a factor of the keen competition coming out of China in the form of HUAWEI, Xiaomi, OPPO, Meizu, and OnePlus, especially given that many of these OEMs forgo traditional marketing and retail outlets and thus can afford to offer their products at extremely competitive prices.

LG’s focus on OLED is perhaps one of the main areas where the company has a clear technological advantage over the competition, save for perhaps Samsung, and thus a doubled-down decision to produce and sell is one vital way to remain afloat.