- Associated Press - Thursday, May 17, 2012

SEOUL, SOUTH KOREA (AP) - South Korean handset maker LG Electronics Inc. has upgraded its flagship smartphone model with a faster chip and a longer battery life, hoping to regain ground lost to more nimble rivals.

The Optimus LTE II smartphone, which costs 935,000 won ($804) without subsidies, will be released by all three mobile carriers in South Korea this week. Park Jong-seok, president of LG’s mobile business, said Thursday the new model is for South Korean users only but similar iterations would be released overseas.

LG, which is recuperating from massive losses in its mobile business since 2010, is betting on the introduction of a faster mobile network called LTE around the world to boost smartphone sales.

Mobile carriers in South Korea, Japan, North America and Europe have begun services on the latest wireless network, aiming to lure consumers seeking quicker downloads of videos and smooth web surfing on a phone.

With a 2-gigabyte memory capacity, the new Optimus phone can run multiple applications simultaneously at a faster rate, LG said. Most other high-end smartphones have a 1- or 1.5-gigabyte memory.

LG claimed the new phone’s battery life is about 40 percent longer than its predecessor, the Optimus LTE.

Once the world’s third-largest mobile phone maker, LG was overtaken by Apple Inc. last year. Sales of LG’s low-end phones were hit by Chinese competitors while its top-end lineup could not compete with the Galaxy series of smartphones by Samsung Electronics Co. or Apple’s iPhones.

IDC Group ranked LG as the world’s fifth-largest phone maker in the first quarter of this year as China’s ZTE Corp. climbed to No. 4 and Apple went up to the third place.

“We reduced the shipments of lowest end feature phones last year,” Park told reporters at a press conference. “We are not so focused on the unit shipments as much as the quality and sales of premium phones.”

LG plans to increase sales of its smartphones by 75 percent to 35 million units this year from 2011. Meanwhile, the company expects its overall mobile phone sales to drop to 80 million from 88.1 million.

LG said it is aiming for smartphones to make up 44 percent of its mobile phone sales in 2012, compared with 23 percent in 2011.

Shortages of mobile chips made by Qualcomm Inc., however, remain a potential roadblock in achieving its smartphone sales goal.

“It is one of the issues that are giving headaches,” Park said. “All industry is experiencing the shortages.”

The new Optimus phone is powered by Qualcomm’s Snapdragon processor. The U.S. chipmaker is the primary supplier of chips that give connections to the faster wireless network.

In the last two years, LG’s handset division lost a total of 943.6 billion won ($811 million). The division returned to the black in the last two quarters. It posted a 35.2 billion won profit in the first three months of this year.

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