[Decision of the Chairman] LG Group's 'Selection and Concentration' in the Post-Corona Era

[Asia Economy Reporter Park So-yeon] "Despite difficulties, there are opportunities, so LG will wisely respond and prepare for growth after the crisis." (Koo Kwang-mo, Chairman of LG Group)

LG Group announced on the 13th that it plans to fully focus on swiftly responding to environmental changes caused by COVID-19 in the second half of this year while preparing new growth opportunities for the post-COVID era.

LG is putting effort into protecting the safety and health of its employees and their families with the belief that the driving force to turn crisis into opportunity is the LG members themselves.

In line with the untact era, LG is transforming work methods such as expanding telecommuting and flexible working hours, accelerating digital transformation to improve work efficiency and productivity, and building an organization that can quickly respond to the changing environment due to COVID-19.

Efforts to create ‘customer value’ will continue unwaveringly. By utilizing digital technology to quickly identify customers’ pain points, LG plans to overcome the crisis through bold and new attempts and relentless challenges that can impress customers.

Each affiliate is proactively preparing response strategies such as supply chain, production, and sales strategies for various scenarios due to the global spread and prolonged COVID-19, focusing on risk management.

Strengthening Market Leadership and Exploring New Business Opportunities: Full Effort to Prepare for Post-COVID Growth

LG Chem plans to turn the crisis caused by COVID-19 into an opportunity to strengthen its market leadership and widen the technology gap in the electric vehicle battery business.

First, it aims to firmly establish itself as the number one in the electric vehicle battery sector through aggressive market penetration. To this end, it will actively pursue large projects centered on the third-generation electric vehicles (over 500km range), increasing the order backlog from 150 trillion won as of early this year.

To ensure stable supply of ordered volumes and prepare for future market expansion, production capacity will be significantly increased. More than half of this year’s 5 trillion won facility investment (CAPEX) will be allocated to the battery business, expanding electric vehicle battery production capacity to 1.7 million units (100GWh) based on high-performance pure electric vehicles by the end of the year.

Additionally, the establishment of a joint venture for electric vehicle battery cells with GM (General Motors) is being prepared without delay, securing an additional production capacity of over 30GWh in the future. Along with this, LG Chem plans to accelerate the establishment of a stable production and supply system by diversifying raw material suppliers and continuously increasing the internalization ratio.

Continuous R&D investment will further widen the technology gap. Over 30% of the more than 1 trillion won R&D budget will be continuously invested in the battery field, strengthening world-class technological capabilities such as the 22,016 battery-related patents secured over the past 30 years (as of August 31, 2020).

LG Electronics is thoroughly managing supply chains amid external environmental changes such as COVID-19, while linking content and services to various products sold globally and securing new business opportunities based on product connectivity.

It plans to continuously develop and launch smart home appliances that combine differentiated performance of home appliances with big data and artificial intelligence, and further build AI solutions that allow customers to enjoy smart daily life seamlessly inside and outside the home, such as connected cars, providing differentiated experiences.

Efforts to expand overseas sales of hygiene appliances, which have gained increased attention due to COVID-19, such as stylers, clothes dryers, air purifiers, dishwashers, and cordless vacuum cleaners, which lead domestic home appliance trends, will also be accelerated.

Robots are also positioned as a future growth engine, with continuous development of robot-related solutions across various fields from industrial to service robots.

LG Electronics is accelerating investment and cooperation to foster the robot business, including partnering with Professor Kim Sang-bae of the Massachusetts Institute of Technology (MIT) Department of Mechanical Engineering to develop next-generation robot technology. Utilizing the research personnel and infrastructure of the MIT Biomimetic Robotics Lab, LG plans to pioneer next-generation robot technology by researching manipulation technology that uses robot hands or arms to pick up or move objects.

Additionally, LG Electronics plans to strengthen open innovation for technology research by establishing the ‘LG Boston Robotics Lab’ in Boston, USA, where many robot-related companies and startups are concentrated.

LG Display plans to establish a two-track production system producing large OLEDs in Paju, Korea, and China to actively respond to the growing demand in the premium TV OLED market.

To this end, hundreds of essential personnel for OLED mass production, including engineers, were urgently dispatched to Guangzhou, China, via chartered flights. This was done as employee entry to China became difficult due to COVID-19.

Since the technological entry barrier for OLED TV panels is high and competitors have not entered the mass production stage, LG Display plans to widen the gap with competitors through the operation of the Guangzhou OLED factory.

LG Display has built a complete system from OLED development to production and sales, achieving golden yield in just three years, compared to ten years for LCD. LG Display plans to apply this successful know-how to the Guangzhou OLED factory to maximize production efficiency.

Once the 10.5-generation OLED factory P10 in Paju, Korea, is operational, LG Display’s large OLED production volume will significantly increase. Based on this, LG Display aims to achieve economies of scale, secure productivity and profitability, and firmly establish OLED as the mainstream in the premium TV market.

LG Innotek plans to lead the global materials and components market based on innovative technology without wavering despite the uncertain business environment caused by COVID-19. In particular, it will actively utilize changes in market paradigms such as 5G, foldable phones, and electric vehicles as new business opportunities.

In the substrate materials business, LG Innotek plans to quickly respond to the increasing demand for core components for OLED and ultra-precision substrates for 5G communication semiconductors, leading the market. It aims to maintain its global top position in RF-SiP, tape substrates, and photomasks.

The optical solutions business will solidify its global market leadership in high-performance camera modules and 3D sensing modules while rapidly expanding applications to automotive, AR/VR, IoT, and more.

The automotive components business, actively nurtured as a future growth engine, will accelerate targeting the next-generation parts market installed in electric vehicles, connected cars, and autonomous vehicles. It plans to continuously introduce differentiated products such as ADAS parts that enhance driving safety, high-reliability vehicle communication parts like V2X modules, eco-friendly high-efficiency electric vehicle parts, and vehicle lighting modules.

LG Household & Health Care is preparing for future growth by flexibly responding to external environments with a solid business portfolio in three areas: Beauty, HPC (Home & Personal Care), and Refreshment, while fostering the derma cosmetics category and expanding overseas markets.

To this end, in May, LG Household & Health Care completed a contract to acquire the Asian and North American business rights of ‘Physiogel’ from global pharmaceutical company GlaxoSmithKline (GSK) for 125 million pounds (approximately 190 billion won).

By securing the globally recognized derma brand Physiogel, LG plans to strengthen its global position in the derma category alongside CNP (Cha & Park Cosmetics), which it acquired in 2014 and developed into a 100 billion won brand.

Earlier, in August last year, LG strengthened its foothold in the North American market (USA, Canada, Puerto Rico) by acquiring the American cosmetics and personal care company ‘New AVON.’ Currently, New AVON is reorganizing its portfolio, which was mainly low-priced products, into premium personal care products such as The Face Shop, hair care brand CHI, and LG Household & Health Care’s body, hair, and oral care products, introducing differentiated Korean cosmetics and personal care products suitable for the local market, expecting natural profitability improvement.

LG Uplus plans to lead growth by discovering future growth engines through 5G as untact culture spreads.

To respond to increased demand for communication services due to lifestyle changes, LG Uplus is strengthening service and network competitiveness through active investment and plans to launch U+5G Service 3.0 in the first half of the year, a new service combining cloud, AR (augmented reality), and VR (virtual reality) based on 5G, providing customers with unique experiences and value.

By combining cloud and AR, LG Uplus plans to offer services that vividly provide content such as children’s English education, fairy tales, and nature observation, and cloud VR game services that allow high-quality VR games to be easily enjoyed with a wireless HMD without a PC, leading competition.

Additionally, LG Uplus plans to increase its differentiated 5G content to about 19,000 pieces this year, including performances, games, webtoons using VR technology, and AR-exclusive education, home training, and entertainment content.

In the enterprise sector, LG Uplus is concretizing 5G business models and expanding references in various industrial areas such as connected cars, smart factories, smart remote control, smart schools, smart police, smart hospitals, smart farms, and smart ports.

With the launch of LG HelloVision, which doubled the paid broadcasting subscribers to 8.25 million, LG plans to reorganize the competition structure in the wired and wireless markets, discover various convergence services that exceed customer expectations, and increase profitability through economies of scale in the broadcasting market as well as synergy effects with other businesses such as 5G.

LG HelloVision is enhancing the fundamental competitiveness of broadcasting services by improving cable TV picture quality and expanding channel numbers, while strengthening future competitiveness through service quality innovation such as expanding gigabit internet coverage to 99% and launching 5G MVNO services.

Along with discovering new growth engines such as rental and electric vehicle charging businesses, LG HelloVision plans to continuously explore new business opportunities in line with changing living environments and consumption trends based on accumulated know-how and sales capabilities in broadcasting and telecommunications.

LG CNS is discovering new opportunities in the untact business sector recently spotlighted based on IT new technologies, such as expanding the externally verified ‘AI facial recognition access control system’ developed at its Magok headquarters.

It is also providing a cloud PC service for telecommuting that enables smooth remote work with the same work environment as the office via the internet from home.

Since early this year, LG CNS has introduced ‘AI Tutor,’ a non-face-to-face English education tool, with about 700 employees currently undergoing education through a mobile app.

In addition, LG CNS plans to strengthen business capabilities through various untact-related IT services that have shown high performance after internal verification.

This content was produced with the assistance of AI translation services.