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LG in quandary over smartphone slump

September 18, 2015

LG has been making efforts to cut the factory prices of smartphones to beef up shipments and add vitality to its sagging mobile business, (Yonhap)

SEOUL (Yonhap) — LG Electronics Inc., South Korea’s No. 2 smartphone maker, is suffering a prolonged slump in its smartphone business in the face of increased competition, which is forcing it to sharply cut the prices of its high-end smartphones, industry sources said Thursday.

The average price of 17 smartphones manufactured by LG Electronics stood at 175,341 won (US$149.29) for customers who opt for 60,000-won level subscription plans offered by the country’s top mobile carrier, SK Telecom Co.

Under similar price plans, customers can buy Samsung Electronics Co.’s smartphones for 414,357 won on average.

The gap gets even wider for Apple Inc.’s iPhone lineup. The average cost of the iPhone lineup came to 858,533 won under price plans offered by SK Telecom.

The data indicate that local mobile carriers are wooing customers with high discounts on LG smartphone models.

LG has been making efforts to cut the factory prices of smartphones to beef up shipments and add vitality to its sagging mobile business, which has been dinged by larger rival brands such as Samsung and Apple at home and Chinese firms overseas.

LG’s mobile communications business, including smartphones, posted 3.6 trillion won in revenues in the second quarter, nearly flat from a year earlier.

Its operating profit nosedived 99.7 percent on-year to 200 million won, which implies it has made only a few cents for every smartphone sold.

Shipments of smartphones came to 14.1 million units in the second quarter, down 3 percent from a year earlier. LG said it marked the first time for sales of long-term evolution (LTE) smartphones to hover above 8 million units in a single quarter.

The overall operating profit dipped 60 percent on-year to 244 billion won in the April-June period, while sales shed 7.6 percent to 13.9 trillion won.