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Technology

Samsung set to gain from LG's smartphone market exit

Android OS, wide lineup likely to help attract South Korean rival's US customers

Analysts say that Samsung Electronics is well placed to pick up customers in the U.S. market after rival LG Electronics announced it is abandoning its smartphone operations after years of losses. (Source photos by AP and Getty Images) 

SEOUL -- Samsung Electronics stands to be a winner -- though not the sole one -- in the key U.S. smartphone market after LG Electronics' decision to stop making and selling the devices, analysts say, citing advantages including use of the same operating system and diverse product lineup.

LG announced on Monday that it will wind down its smartphone operations by the end of July after years of mounting losses. The Seoul-based company will instead focus on sectors including artificial intelligence, robotics and 6G telecommunications technology along with its mainstay home appliances and televisions.

The decision, which LG had been telegraphing for several months, came as little surprise given the scale of its smartphone losses. Now, analysts are honing in on what companies can best pick up the pieces.

They see Samsung as poised to gain customers in the U.S., where LG has a 10% market share -- the third biggest. Both companies both use the Android operating system, the rival of Apple's proprietary iOS.

"On the Android team, Samsung is expected to benefit as LG withdraws," said Lee Dong-joo, an analyst at SK Securities.

SK, in a report issued before LG's withdrawal announcement, forecast that Samsung's market share in North America will rise to 30% this year from 27% in 2020, while Apple's portion will decline to 36% from 39% during the same period. Overall smartphone demand will increase by as much as 16% to 150 million devices in the region in 2021 from last year thanks to a speedy coronavirus vaccination rollout, SK said.

Counterpoint Research, meanwhile, says Samsung is in a better position than Apple after LG's withdrawal -- because of its more diverse product lineup compared with Apple's focus on the top-tier segment -- and could attract some of LG's customers. Samsung releases new versions of its flagship Galaxy S series smartphones every year while also launching midrange A series handsets.

"Samsung may partially benefit from LG's exit as its products cover a wide range," said Counterpoint analyst Kang Min-soo.

Kang said others also stand to make inroads. Motorola and Alcatel phones, for example, will likely gain the most in the U.S. as they, like LG, focus on the lower price segment there. He said that more than half of LG devices are priced at $150 or less, giving those two brands an advantage over costlier Samsung products. 

Chinese manufacturers, which also compete for customers with lower prices, will reap little from the market hole opened by LG's withdrawal as they have virtually no presence in the U.S.

SK Securities' data show that Huawei Technologies, for example, had 0% market share in North America last year as did Xiaomi, Oppo and Vivo.

Counterpoint said that Apple dominated North America last year with 50% market share in smartphone shipments, followed by Samsung with 25% and LG with 10%. Motorola came in fourth with 5%, while Alcatel was fifth at 4%.

The expected boon for Samsung comes as the company may expand its presence in the semiconductor industry in the U.S. It is considering adding foundry lines to its production facilities in Austin, Texas. Also, Samsung has been invited by the White House to attend a meeting to discuss chip supplies on April 12, along with industry peers, according to industry sources and media reports.

Samsung is the world's largest memory chipmaker and No. 2 in the foundry business after Taiwan Semiconductor Manufacturing Co.

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