Patents, LG Elec.’s legacy from smartphone business

LG Electronics Inc., the global home appliance leader, is targeting the quickly growing global earbuds market with new products based on technologies developed by its closed-down smartphone unit, the patents of which are creating additional profit.

The South Korean electronics giant has obtained approval for four new true wireless stereo (TWS) earbuds from the National Radio Research Agency, a requirement for their sale in the country, according to industry sources on Tuesday. The company is scheduled to release the products sequentially from as early as this month.

It is surprising for LG to launch multiple new earbud models in close succession since the company has refrained from the release of new mobile products since its 2021 announcement that it would exit the loss-making mobile phone business, which has accumulated operating losses of 5 trillion won ($3.8 billion).

The company transferred the earbuds business unit to the home entertainment division that produces TVs and audio equipment. It last unveiled a new earbuds model for online sale in February.

“We will actively and continuously work on the TWS headset business,” said an LG official.

The global TWS headset market is rapidly growing. Its shipments are forecast to soar to 1.2 billion units by 2024 from only 1 million units in 2016, according to market research firm Strategy Analytics Inc.

PROFITS FROM PATENTS

The earbuds business is not the only beneficiary within LG from technology patents secured by the smartphone unit, according to the company sources.

“We have been making sustained profits from patents related to core technologies, even as we closed down the smartphone business,” said a senior executive. “We continued to mull ways to generate more profits as the patents are widely used.”

LG, which was far behind Samsung Electronics Co. and Apple Inc. in smartphone sales, has made notable achievements in technology patents, industry sources said.

The Knock Code, in which LG registered a domestic patent in 2014, is an exemplary case, according to the sources. The security feature enables a user to unlock the phone when the screen is off.

LG aims to raise profits from patents on communication and smartphone technologies. In March, the company officially added the licensing business for intellectual property rights such as patents to its business purposes.

“We have various unknown original technologies,” said another company official, expecting sustained profits from those patents. “We plan to strengthen as an organization that manages patents related not only smartphones but also home appliances and other products.”

Write to Sungsu Bae and Ji-Eun Jeong at baebae@hankyung.com
Jongwoo Cheon edited this article.