LG Electronics aims to transform into platform-based tech firm by 2030

When LG Electronics Inc. made a surprise move to ungracefully exit the mobile phone business, one of its mainstay businesses, two years ago, investors wondered, what’s its next growth engine?

It didn’t take long for the South Korean electronics giant to come up with an answer.

On Wednesday, the company unveiled a new business strategy: Transform into a platform-based tech giant from a traditional home appliance maker.

With the new business goal, Chief Executive Cho Joo-wan said LG aims to achieve 100 trillion won ($77.5 billion) in annual sales by 2030, up sharply from 65 trillion won in 2022.

LG said it will invest 50 trillion won, including over 25 trillion won in R&D projects and 17 trillion won in infrastructure, through 2030 to drastically change its business portfolio and pursue “qualitative” growth.

“We won’t be just content with making good home appliances. We will take a bold step to transform into a smart life solution provider that connects to various consumer experiences,” Cho said at a press conference at LG Science Park, its research center.

Under its Vision 2030, the CEO said LG will pursue three growth drivers: increase sales of non-hardware products, promote the business-to-business (B2B) model and explore new growth areas such as electric vehicle charging and digital health.

The three sectors will account for more than half of LG’s annual sales and operating profit by 2030, he said.

REINVENTING THE WAY LG WORKS AND COMMUNICATES

“We will establish a brand-new LG by reinventing the way we work and communicate,” said the CEO, who’s known in the West by his English name William Cho.

LG said it will invest more than 1 trillion won over the next five years to strengthen its content competitiveness and drive the growth of LG Channels, an advertisement-based free broadcast platform.

With the investment, LG plans to strengthen its service platforms through media subscriptions and rentals to generate recurring profits, it said.

In 2021, the company entered the TV content platform market with its own webOS software for smart TVs.

The number of LG Channels users has increased to 48 million in 29 countries from 20 million in 25 countries last year.

In the B2B segment, the company aims to achieve annual sales of 40 trillion won by 2030.

One of the key areas LG has been nurturing in recent years is the automotive parts business.

It plans to become a global top 10 vehicle component maker by doubling revenue to 20 trillion won by 2030.

The order backlog of LG’s vehicle component division is expected to reach 100 trillion won by the end of this year, it said.

TRIPLE 7: LG’S 2030 FINANCIAL OBJECTIVE

As a future growth driver, LG plans to strengthen its digital healthcare business, with its North American Innovation Center taking the lead.

To expand its presence in the EV charging business, LG recently unveiled four charging systems via its affiliate HiEV Charger, which it acquired last year.

LG plans to expand its EV charging business into Europe and other Asian countries next year.

“We will actively seek M&As or joint venture projects for our inorganic growth,” said an LG executive.

If all goes to plan under Vision 2030, LG will achieve an average annual revenue and operating profit growth rate of 7% and a sevenfold increase of its enterprise value by then, he said, calling it a “triple 7” goal.

Write to Ye-Rin Choi and Ik-Hwan Kim at rambutan@hankyung.com

In-Soo Nam edited this article.