Let’s start with the good news. LG truly had a pretty good quarter (on the strength of appliance sales). The LG Home Equipment & Air Solution division made $5.23 billion for Q2. Anybody who’s been following the corporate for the past a number of years can guess where the bad news comes.
Smartphone sales dipped 21.3% year over year for the South Korean firm. The culprits are as you’d expect: an overall slowing of the smartphone market, coupled with aggressive undercutting from Chinese producers. Huawei appears to lead the pack on that front, with a big improvement in sales, in spite of a confluence of external factors.
The smartphone unit noticed an operating lack of $268.4 million, regardless of a 6.8% increase in sales from the quarter prior. LG chalks up the loss to higher marketing on new models and April’s move from Seoul to Vietnam for smartphone manufacturing for longer-term cost-cutting.
Regardless of this, the corporate says it’s still bullish about smartphone sales for Q3. “The introduction of competitive mass-tier smartphones and rising demand for 5G products are anticipated to contribute to improved performance within the third quarter,” it writes in an earnings release.
LG is, in fact, among the first firms to launch a 5G handset, with the V50 ThinQ. The next-gen wireless technology is predicted to increase stagnating global smartphone sales, although much of that will depend upon the speed with which carriers are able to roll it out. It appears unlikely that 5G in and of itself shall be a quick or even longer-term fix for a struggling category.