"I hope we can create the future of space together based on artificial intelligence (AI)." (Satya Nadella, Chief Executive Officer (CEO) of Microsoft (MS))
Last week, Nadella CEO left a message on the LinkedIn account of Jo Joo-wan, President of LG Electronics. Jo said, "I am pleased with our partnership and its potential," and responded, "I look forward to our journey ahead."
This conversation between the two CEOs is expected to strengthen the collaboration between LG Electronics and MS. LG Electronics and MS announced a plan to develop a mobile AI home hub called 'AI Agent' (project name Q9) at the world's largest IT exhibition, 'CES 2025,' last month.
According to industry sources on the 11th, President Jo has been meeting in succession with leaders of global big tech corporations, tightening control over global management. Early last year, he met with Mark Zuckerberg, CEO of Meta, to discuss collaboration on mixed reality (XR) devices, and in May and July of the same year, he discussed collaboration strategies with Nadella and Cristiano Amon, CEO of Qualcomm.
◇ Former head of Australia and North America branches… "Global network and language skills are effective"
There are evaluations that President Jo's actions are distinctly different from those of previous LG Electronics CEOs. Historically, LG Electronics CEOs mainly focused on strengthening internal capabilities. Instead of diversifying the business based on networks with global corporations, they concentrated on existing businesses such as home appliances.
For example, former Vice Chairman Jo Sung-jin is known as a 'technology expert' who elevated LG Electronics' washing machine technology to world-class levels. Although he announced collaborations with global companies like MS and Mercedes-Benz during his tenure, he focused on strengthening the ultra-premium brand strategy of existing businesses.
In contrast, President Jo Joo-wan has spent more than half of his career abroad, which analysts suggest provided him with global insights and language skills that enabled him to expand connections with global big tech. Jo is regarded as a 'global strategist' who has served as the head of the overseas business strategy group of the DA Business Division, as well as in various leadership roles in Canada, Australia, the United States, and North America (vice president).
An industry insider noted, "It is true that since Jo, who has extensive overseas work experience, became CEO, there has been an increased connection with global big tech companies," adding, "This appears to be part of a strategy aimed at quickly responding to global market trends such as artificial intelligence (AI)."
◇ "Finding breakthroughs in the AI market by joining forces with big tech"
The rapid changes in the global market environment centered around AI are also cited as a backdrop for strengthening cooperation with global big tech. LG Electronics' traditional stronghold in TVs is under pressure from competing companies such as China, making it challenging to defend. According to market research firm Omdia, the total market share (by quantity) of China's top three TV brands, TCL, Hisense, and Xiaomi, exceeded the combined market share of Samsung Electronics (18.1%) and LG Electronics (11.3%) at 30.1% by the third quarter of this year.
This phenomenon is reflected in the performance of LG Electronics. Its profitability in the TV and home appliances sectors has deteriorated faster than expected, leading to losses (based on headquarters) for three consecutive fourth quarters. With the home appliance business stuck in stagnation for several years and the influence of Chinese companies growing, there is an urgent need to enhance profitability.
It is analyzed that LG Electronics is pursuing a strategy to secure a foothold in the rapidly growing AI market through cooperation with global big tech. An industry insider stated, "As business-to-consumer (B2C) home appliance sales are gradually declining, LG Electronics is expanding its business-to-business (B2B) operations," but also noted, "It cannot be denied that the reason big tech companies like Meta and Qualcomm are reaching out to LG Electronics is due to its competitiveness in the B2C home appliance sector. Collaborating with these companies is a strategy to establish new breakthroughs centered on the AI market."