Cho Ju-wan, the president of LG Electronics, noted that the overall business portfolio of LG Electronics is facing a profitability crisis due to worsening market conditions both domestically and internationally, and it is entering a major transformation period. He mentioned a smooth business transition not only in existing home appliances but also in the corporations market (B2B), pledging continuous growth centered around Europe.
On the 5th (local time), President Cho explained LG Electronics' B2B and European business strategies at the ongoing 'IFA 2025' event in Berlin, Germany. He pointed out 'qualitative growth' focusing on data center cooling solutions, parts and equipment businesses, and automotive businesses as key areas to counter intensified global competition, emphasizing that "the business structure is smoothly transitioning to one where both revenue and profit grow together."
First, President Cho emphasized business achievements by saying, "We have signed an MOU to supply data center cooling solutions not only in Indonesia and the United States but also in Saudi Arabia's Neom city." He previously signed an agreement on the 2nd with local power company ACWA Power, electronics distribution company Shaker Group, and data infrastructure company 'Datavolt,' to collaborate as strategic partners in supplying cooling solutions for the next-generation data center being constructed by Datavolt in Riyadh, Saudi Arabia.
Datavolt is operated by the Abu Nayyan family, the owner of the Shaker Group, a partner in LG Electronics' joint production company in Saudi Arabia. It is constructing the largest net-zero AI data center in the Middle East at the maritime industrial complex 'Oxagon' of the mega development project Neom city, led by the Saudi Arabian government. The company is also continuously investing in constructing large-scale data centers in Asian regions such as Uzbekistan and Bangladesh.
LG Electronics possesses expertise in cooling solutions for AI data centers, including ultra-large chillers and cooling distribution units (CDU), as well as environmentally friendly heat recovery systems and power-saving direct current solutions that reduce power consumption and heat generation in data centers. Through this, it supplies cooling solutions to domestic and international data centers, and recently secured contracts for hyper-scale AI data center cooling solutions worth hundreds of billions of won in the United States, the largest market for AI data.
President Cho also mentioned the automotive business, which he emphasized as another promising B2B area, stating, "The in-vehicle infotainment (IVI) sector accounts for more than 70% of LG Electronics' automotive business and yields a high operating profit of 7% to 8%." He noted, "This sector plays a pivotal role in driving the overall automotive business."
He also highlighted the competitiveness of the parts solutions business supplying motors and compressors externally, as well as the smart factory solutions business of the production technology institute. President Cho stated, "Annual sales from parts exceeded the trillion-won mark, and the smart factory solutions business has already achieved 85% of its target order amount of 400 billion won this year, nearly reaching 1 trillion won in order amounts just two years after its launch."
He added that areas of qualitative growth, including B2B, platform business, non-hardware, subscriptions, and direct-to-consumer (D2C) sectors, are approaching 50% of total revenue and 80% of operating profit, expressing plans to drive these segments even further.
In response to a question about plans related to the aerospace business, he replied, "In the telematics sector, we are number one globally, and our communication-related standard patents rank among the top tier globally," adding, "As this is an area where synergy can be created with the technology portfolio owned by LG Electronics, we are closely reviewing the possibility of commercialization in cooperation with group companies such as Innotech."
President Cho identified the strategy of AI home and built-in appliances as a way to achieve the goal of becoming the number one home appliance brand in Europe. He said, "Under the direction of 'empathy intelligence' that resonates with customers, we aim to provide practical AI that genuinely helps enhance customers' lives while strengthening our penetration into the European market with built-in design appliances optimized for European lifestyles."