LG's mobile business reports bigger loss as chip prices rise

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A man walks by an advertisement of LG Electronics products at a shop in Goyang, South Korea

A man walks by an advertisement of LG Electronics products at a shop in Goyang, South Korea (Photo: AP)

SEOUL, South Korea (AP) — LG Electronics Inc. reported Thursday a wider loss from its mobile business even as overall business stayed profitable, as prices of mobile components jumped.

The South Korean electronics company said that its mobile business lost 375 billion won ($334 million) during the July-September quarter.

The operating loss has nearly tripled from the previous quarter because prices of memory chips and other components for smartphones jumped.

The result highlights the deepening challenge for smaller phone makers such as LG to stay profitable as the premium smartphone sector is dominated by Samsung Electronics and Apple.

The rising prices of memory chips, stemming from a tight supply of memory chips and a global surge in mobile data traffic, has been a boon for memory chip makers such as Samsung and SK Hynix, but the handset makers like LG Electronics had to pay a bigger price.

A corporate logo of LG Electronics is seen at its shop in Goyang, South Korea. (AP Photo/Lee Jin-man)
A corporate logo of LG Electronics is seen at its shop in Goyang, South Korea. (AP Photo/Lee Jin-man)

LG's G6 smartphone and other gadgets saw higher sales but that did not boost its profitability.

The company's overall business stayed in the black for a third quarter thanks to the home entertainment business that posted its best quarterly profit.

Thanks to consumers who snapped up its high-end OLED TVs and its strategy to focus on increasing the portion of premium products, LG's TV division posted higher sales and improved profitability, it said.

Overall, LG reported 318 billion won ($283 million) in net income for the July-September quarter, slightly better than expected. It was the company's third straight quarterly profit after two straight quarters of net loss.

Sales rose 15 percent over a year earlier to 15.2 trillion won ($14 billion) while operating income jumped 82 percent to 516 billion won ($459 million).

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