|LG Electronics CEO Kwon Bong-seok
There have been a series of media reports recently stating that the company may exit the smartphone business after seeing losses for years. In response to the speculation, Kwon sent an email to employees and clarified the company's position about the operation of its mobile communications unit, which oversees the business.
LG said the internal communication was sent to employees to reassure them that "whatever decision is made, their wellbeing is LG's first priority."
This is the first time that the company has officially spoken about the continued existence of its smartphone business. LG added the company will "transparently" share any information about its future as soon as any decision is taken.
LG added it was time for the company to make a "sober judgment" about whether to continue with the business as competition in the global market was getting stiffer.
At a time when the company is expanding its vehicle parts business, LG Electronics investors took the message as meaning that LG will withdraw from smartphones, and its shares jumped 12.84 percent to close at 167,000 won.
LG Electronics has made repeated effort to revive the money-losing business such as reorganizing its product lineups, increasing outsourcing and releasing smartphones with different form factors.
However, the mobile communication business has suffered operating losses for 23 consecutive quarters since 2015, amounting to around 5 trillion won ($4,546 million).
With LG Energy Solution, the battery-making arm of LG Group, expanding its presence in the global electric vehicle (EV) business, LG Group affiliates such as LG Display, LG Innotek and LG Chem are rushing to become major parts suppliers in the growing sector.
LG Electronics is also riding on the burgeoning EV business as the company announced in December that it had decided to set up a joint venture with Canada-based vehicle parts maker Magna International. Headquartered in Korea, the joint venture, tentatively named LG Magna e-Powertrain, will be launched in July and will manufacture e-motors, inverters and onboard chargers.