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Here’s how LG could make money from its dead mobile business

Rahul Srinivas
By

Following several years of struggling while trying to compete with biggies like Samsung and Apple, LG finally gave up and exited the smartphone business in April 2021. LG admitted that the mobile phone space had become “too competitive” and that the company was better off focusing its energy on other areas. Given that the company has been doing well since it shuttered its loss-making mobile division, the decision was generally thought to be a step in the right direction.

LG’s exit from the smartphone business, however, also left it with a lot of patents that it could no longer use. And by a lot, we mean around 20,000 individual patents that relate to 4G, 5G, and other wireless technology. With the company unable to use these patented technologies on its devices anymore, LG estimates that it costs around 20 billion won ($16,166,000) every year just to “maintain” them.

According to The Elec, this astronomical maintenance cost is prompting the top management at LG to start licensing these patents to smartphone brands. According to the report, LG is considering creating a spinoff company these patents would be transferred to — which in turn would license them to anyone who wishes to use them, including its erstwhile competitors. LG has also hinted at selling some of it patents to companies who are interested in buying them. LG, however, wants these companies to also ensure they compensate the LG employees who were behind these patents.

Some of these patents, could, however, remain with LG for as long as possible because of their sheer importance. In fact, the company has already indicated that it plans to use them to develop its own smart appliances and Internet of Things products. LG also announced late last year that some of these patents would help accelerate the development of its vehicle component solution business.

What makes LG’s decision to license/sell its patents at this time interesting is the fact that several companies — including automaker Volkswagen — had approached LG about purchasing these very patents a year ago, right after the company shuttered its mobile business. It remains to be seen if these companies would still be interested in acquiring them now that LG is considering selling them.

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