LG Electronics picks private 5G network as next growth engine

LG Electronics Inc. is seeking to make inroads into the private 5G network market, set to grow rapidly amid accelerated migration to automation in all industries, in its first bid to diversify its business portfolio since its picked automotive electronics as a new growth engine in 2013.  

The South Korean electronics giant plans to apply with the Ministry of Science and ICT to register as a private 5G network operator within the first half of this year, according to sources in the country’s telecommunications industry on Friday.

The ICT ministry will decide whether to approve it or not after it reviews the company’s business plan including a frequency band usage plan.

A private 5G network is a nonpublic, business-to-business (B2B) network service exclusively used by businesses for faster and more stable network connections, key in the operations of smart factories, robot-driven logistics and hospitality services, and other various industrial automation systems. Global demand for such services is rapidly increasing following the development of future technologies including artificial intelligence (AI), big data, cloud, autonomous driving and augmented reality (AR).

LG Electronics has picked private 5G networks as its next growth engine in hopes to repeat the success of its automotive electronics business, which is set to become its new cash cow after swinging to profit for the first time last year since being added to the company’s business portfolio in 2013.

SYNERGY WITH LG’S ROBOTS

The private 5G network is expected to have great synergy with LG Electronics’ existing B2B businesses such as automated mobile robots and automated guided vehicles that are offered to smart factories, logistics centers and hospitals.

If LG Electronics obtains permission for the nonpublic 5G network business, it could offer LG CLOi industrial and commercial robots packaged with its own private 5G network service, according to an official from LG Electronics.

The private 5G network is a business-exclusive network service using 5G that is accessed only via a certain business or organization’s devices or terminals.

Its demand is growing fast these days because it can provide customized network services with stronger security thanks to 5G’s broader mobile network, reliable low latency communications and massive machine-type communications features.  

While the public 5G network uses a 3.5 GHz frequency spectrum, the private 5G network uses 28GHz, which is narrower but faster in data transmission.

It is highly sought after by smart factories, highway systems and ports, as well as automated vehicles in logistics centers and hospitals.

KOREA BEHIND OTHER COUNTRIES

Korea lags other countries in building private 5G networks despite being the first in the world to operate public 5G mobile networks.  

Since 2019, global manufacturing powerhouses Germany, Japan and the UK have been actively creating their own private 5G network ecosystems.

Germany was the first European country to allow private companies to apply for a nonpublic 5G network license. Mercedes-Benz, Bosch and Siemens are licensed to use private 5G networks for their business.

In Korea, Naver Cloud under Naver Corp. became the first private business to win a private 5G network license in December 2021, followed by seven companies including LG CNS Co., SK Networks Service Co. and CJ OliveNetworks Co.

The Ministry of Science and ICT leads Korea’s E-Um 5G project to foster the country’s private 5G network business.

Write to Ji-Eun Jeong at jeong@hankyung.com

Sookyung Seo edited this article.