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Samsung's presence in the South Korean smartphone market would further expand with LG Electronics' withdrawal from the mobile business, industry observers said.
Samsung is already the market leader and LG's departure would limit alternatives for local consumers.
LG Electronics Inc. will become the first major smartphone brand to pull out from the mobile business after years of money-losing performance after failing to find a buyer.
The company was in talks with Vingroup of Vietnam and Volkswagen of Germany to sell the mobile business. Negotiations fell through.
Once the world's third-largest handset maker, LG was relegated to ninth spot last year after shipping 24.7 million smartphones with a market share of 2 percent, down 13 percent from a year earlier.
The South Korean firm's mobile communications (MC) unit will stop producing and selling handsets after July 31 due to its long slump and fierce competition.
It also scrapped its plan to launch a smartphone with a rollable OLED display.
LG will produce handsets until end-May to meet existing orders and would provide sufficient after-sales services.
The decision ends LG's mobile business that first started in 1995.
