LG’s global HVAC push takes off with new deal in Singapore

LG Electronics Inc. has landed a deal to supply its heating, ventilation, and air conditioning (HVAC) system to a fulfillment center in Singapore, a logistics hub in Asia Pacific, giving impetus to the South Korean electronics giant’s global push in its new growth driver.

The company announced on Wednesday that it inked a contract to supply its advanced commercial HVAC system, dubbed Multi V. i, to the MSL Fulfillment Center in Tuas, Singapore.

The MSL Fulfillment Center, spanning about 59,400 square meters – equivalent to nine soccer fields – is certified as one of the highest-rated green buildings in the city state.

LG Electronics said its HVAC system was the only solution meeting all of the building’s technical, environmental and efficiency requirements, beating its major global competitors.

The latest deal is expected to accelerate the Korean electronics giant’s push to expand its presence in the global HVAC market, which is set to grow rapidly amid the rapid AI transformation, as a global top-tier player despite its late debut compared to incumbent global leaders.

GATEWAY TO A BIGGER MARKET 

As Tuas, Singapore has recently emerged as a logistics hub in Southeast Asia, a successful track record in the island country is expected to pave the way for LG’s fast advance into other countries in the region, such as Indonesia and Malaysia.

HVAC is one of LG’s three mainstay growth drivers for its business-to-business push, alongside its automotive components and smart factory businesses.

LG has set a target to bump up the contribution of its B2B business to the company’s total revenue to 45% by 2030, versus 35% in 2023 and 27% in 2021.

The HVAC division is central to reaching this goal, with LG targeting 20 trillion won ($13.6 billion) in HVAC sales by the end of the decade.

Thanks to the booming logistics and AI industries, the global HVAC market is forecast to grow to $61.0 billion in 2028 from $58.4 billion in 2023, according to global industry tracker IBISWorld.

To provide a boost to its HVAC business, LG set up a dedicated business division, LG Eco Solution (ES) Company, late last year. It also runs HVAC system production facilities in key markets – the US, China, Thailand and Türkiye.

After landing a deal to supply its advanced chiller to Microsoft Corp.’s AI data centers, it has been seeking to win more orders from multinational companies.

“LG will continue to unlock new business opportunities with region-tailored (HVAC) systems,” said Lee Jae-sung, the head of the ES Company.

LG offers residential, commercial and industrial HVAC systems.

Its Multi V. i system, which will be fitted in the fulfillment center in Singapore, incorporates LG’s most advanced technology.

It is powered by an AI engine, capable of learning and adjusting to operational patterns, a next-generation inverter compressor and a bigger heat exchanger compared to previous models, explained the company.

Write to Eui-Myung Park at uimyung@hankyung.com

Sookyung Seo edited this article.