LG Solidifies Profitability vs. Samsung's Business Overhaul...Who Will Win This Year's Home Appliance Battle?

Diverging performance in home appliances division
LG expected to post up to 2.4 trillion won in profit
Samsung projected to see up to 1.5 trillion won in losses

This year, the home appliance businesses of LG Electronics and Samsung Electronics, the two major pillars of the domestic home appliance industry, are expected to show diverging trends amid changing market conditions. Securities firms expect LG Electronics to continue generating stable profits based on a strategy focused on subscriptions and premium products, while they assess that Samsung Electronics is concentrating on solidifying its profit base by expanding artificial intelligence (AI) appliances and strengthening its service competitiveness.

LG aims to cement No. 1 position with subscriptions and premium products

According to the home appliance and securities industries on the 12th, the average operating profit estimate presented by major securities firms for LG Electronics' Home Appliance & Air Solution (HS), Home Entertainment (MS), and Air Solution (ES) business divisions combined this year stands at 1.8748 trillion won. In particular, Daishin Securities offered a high forecast of 2.43 trillion won, analyzing that "the active adoption of artificial intelligence (AI) features, service differentiation through subscriptions, and sales growth centered on premium products will drive an increase in average selling prices, which in turn will lead to improved operating profit."

LG Electronics is also being credited with having proven its ability to respond to tariffs by achieving the No. 1 market share in sales for two consecutive years in the United States, the world's largest home appliance market. According to U.S. market research firm Traqline, LG Electronics' share of U.S. home appliance sales last year (based on six key product categories including washing machines, dryers, and refrigerators) was tallied at 22%. Daishin Securities pointed out that "active responses to North American tariff policies last year, such as increasing the production share in the United States and Mexico, and securing margins through price hikes on premium products, translated into an improvement in the operating margin."

Trom AI Wash Tower by LG Electronics

In addition, despite fierce pursuit from Chinese competitors, LG Electronics is solidifying its market position in the home appliance segment with a strategy centered on high value-added products. The TV business, which posted a loss last year, is also planning a full-scale counteroffensive by leveraging its premium technology lineup, including organic light-emitting diode (OLED) TVs, which have ranked No. 1 globally for 13 consecutive years, and micro light-emitting diode (LED) TVs.

The "home appliance subscription" business, which combines products and services, has established itself as a key revenue source for breaking through the phase of slowing demand. LG Electronics' subscription business revenue last year amounted to about 2.5 trillion won, up 29% from the previous year. LG Electronics plans to expand its subscription business overseas to countries such as Malaysia, Thailand, and Taiwan, while at the same time reinforcing its smart TV platform business to establish a structure that generates high-quality content revenue even after hardware sales.

Samsung seeks a breakthrough through structural reform

By contrast, expectations for Samsung Electronics' home appliance business have been somewhat lowered. Based on securities firm reports published this month, the average combined operating profit estimate for the Digital Appliances (DA) and Visual Display (VD) businesses stands at 29 billion won. Some even raise the possibility of a loss. Unlike its mainstay businesses such as semiconductors, which are maintaining a solid trajectory, analysts say the home appliance division could enter an adjustment phase in terms of profitability due to factors such as slowing demand and rising costs. The industry believes that, even taking into account that these are early-year forecasts, a clear disparity is emerging between business divisions.

Samsung Electronics plans to break through the short-term stagnation in profitability in its home appliance division head-on through "AI innovation." Internally, the company expects that company-wide structural reform led by AI appliances will serve as a catalyst for a rebound in earnings. Under the banner of popularizing AI appliances this year, Samsung Electronics has equipped its entire lineup, including washing machines and refrigerators, with AI features as a standard. This strategy goes beyond simple hardware performance competition and aims to preempt the user experience itself through the "SmartThings" ecosystem, which maximizes connectivity between devices.

Samsung Electronics' 'Bespoke AI Refrigerator'. Samsung Electronics

In particular, as the "AI Subscription Club" rapidly spreads, mainly around premium TVs and large home appliances, Samsung has emerged as a powerful challenger in the subscription market that had been led by LG Electronics. Its differentiation point lies in transplanting strengths in smartphones and semiconductor technologies into home appliances to maximize energy efficiency and provide personalized services. Progress in the B2B (business-to-business) field and in the heating, ventilation, and air conditioning (HVAC) market is also encouraging. Samsung Electronics is aggressively increasing its commercial market share by leveraging collaborations with global HVAC companies and its own smart solutions.

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