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Is LG Building A Business That’s Less Reliant On Retail?

LG Electronics who built their reputation up on consumer electronics, appliances and OLED Display panels, is now looking for growth from infotainment systems and components for electric cars according to their global CEO Willian Cho a former President of LG Electronics Australia who has given his first media interview since taking the helm of the Company globally two years ago.

Last week LG was canvasing their future as a media Company, up against free to air TV stations, this week they have outlined more of their future plans and there is little mention of CE or appliances.

According to Cho LG Electronics aims to generate $17 billion in annual sales from its vehicle solutions business by 2030.

This according to Bloomberg this will represent around 20% of total revenue, up from 14% in the first half of 2023.

According to Cho EV vehicles and the supply of components will be the Companies main growth engine, he said during an interview this week.

“We are going to focus on what we do well,” he said, pointing to what he described as LG’s deep understanding of consumers and ability to respond to evolving technologies. LG doesn’t intend to make its own EVs.

Currently home appliances and TVs accounted for more than half of sales at the South Korean business with Cho admitting that he is working on transforming the 65-year-old electronics behemoth into a company that embraces digitization, electrification and services linked to its devices.

LG aims to spend at least A$57 billion on new businesses by 2030, according to a long-term strategy published in July.

The transition will help LG’s diversification from thinner margin, capital-intensive hardware operations, particularly as inflation and worries about recession dent demand for electronics.

Insiders at IFA said that the businerss globally is moving away from the “volitility & uncertanty of dealing with retailers”.

LG is already a significant player in vehicles, with US$80 billion in outstanding orders for technology such as e-powertrains, Cho said.

It counts General Motors Co. and most carmakers in North America and Europe as customers.

Cho deflected questions on whether LG is in talks with Apple for a potential partnership on EVs, saying it’s something he is often asked. “We are confident and ready to cooperate with current and future automakers,” the 60-year-old said.

LG Magna, a partnership with Canadian auto parts manufacturer Magna International, will unveil a concept car at the CES trade show in Las Vegas next year.

The joint venture is integrating hardware and software, including an advanced driver assistance system and vehicle entertainment, Cho said.

Challenges include fallout from geopolitical tensions involving China and Russia, as well as competition from Chinese rivals such as Haier Smart Home, LG has also in the past been affected by Chinese boycotts of Korean products Bloomberg claims.

While there has been a “little bit of a strain from the supply chain point of view,” LG has no plan to “intensively shift Chinese production” to other regions for now, Cho said.

Cho said competition from Chinese peers is growing in lower-end appliances and televisions. A goal for LG is to dominate both premium and cheaper electronics, and generate revenue with services connected to those devices.

“We need to continuously lead the industry,” Cho said.

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