[Concall Summary] LG Smartphones Seek Breakthrough with 5G Mid-Range Phones

Sales Increase Driven by Expanded Mid-Range Sales in North America
22 Consecutive Quarters of Losses... Reduced in Q2 and Year-on-Year
"Revenue Growth and Profit Improvement Through Expanded 5G Entry-Level Lineup"

LG Electronics' 400,000 KRW Range 5G Mid-Range Phone 'Q92'

[Asia Economy Reporter Han Jinju] LG Electronics' MC Business Division reduced its losses thanks to increased sales of mid-to-low-end smartphones. With the 5G smartphone market set to take off next year, the company plans to expand its 5G budget lineup to fill the gap left by Huawei.

On the 30th, LG Electronics' MC Business Division announced that it recorded sales of 1.5248 trillion KRW and an operating loss of 148.4 billion KRW in the third quarter. Although it posted losses for 22 consecutive quarters, sales increased by 16.51% compared to the second quarter (1.3087 trillion KRW), and operating losses decreased by 58 billion KRW from the second quarter (206.5 billion KRW). Compared to the same period last year, sales remained at a similar level, while operating losses decreased by 12.8 billion KRW.

LG Electronics expects the 5G smartphone market to expand significantly following the launch of the iPhone 12 and anticipates that smartphone market demand will recover to pre-COVID-19 levels. According to market research firm Canalys, smartphone shipments next year are expected to reach 544 million units, double this year's 278 million units. Seo Dongmyung, head of planning and management at the MC Business Division, said, "With the launch of the LG Wing, we will expand sales through budget product lineups focused on key target markets such as North America and Latin America, and pursue profit improvement through continuous operational efficiency."

As Huawei is hampered by U.S. government sanctions, LG Electronics is expected to increase its market share in North America and Europe, where it is showing strength. Seo said, "Due to Huawei sanctions, there is expected to be little impact in markets such as the U.S., South Korea, and Japan. In Central America, including Latin America and Mexico, we are promoting sales expansion with competitively improved budget models to replace Huawei's slots. In Europe, we expect additional premium sales by leveraging 5G and new form factor products (Wing) to target Huawei's vacant position."

Next year's smartphone business strategy also focuses on 'strengthening budget models.' LG Electronics released various mid-to-low-end smartphones this year, including the Q51, Q61, K41S, K61, Q92, Q31, Q52, K62, K52, and K42. Seo said, "Based on cost competitiveness through ODM, and positive consumer responses to budget products with improved design, multi-cameras, and large screens, we plan to actively drive sales expansion of 5G budget lineups across mid- and low-price ranges, while simultaneously improving profitability."