LG Electronics has commenced mass production of key home appliance components at its recently acquired plant in Mexico, accelerating its North American supply chain restructuring. The company aims to meet the tariff-free requirements of the U.S.-Mexico-Canada Agreement (USMCA) while increasing production rates at its U.S. facilities to mitigate trade risks amid pressure from U.S. trade authorities.
According to industry sources, LG's Reynosa facility in Mexico recently completed line renovations and began shipping TV components this month, approximately four months after acquiring the local parts factory from Kwang Sung Electronics for 11.7 billion won in June. LG plans to significantly increase the local content ratio of components used in its exports to the U.S. by shifting to in-house production of plastic parts for TVs.
This move is a proactive response to heightened trade regulations from U.S. authorities. Since the Trump administration, the U.S. has pressured companies to increase the proportion of North American-made components, including those for artificial intelligence hardware, while imposing a 40% tariff on products exported through third countries like Vietnam.
During a conference call on second-quarter earnings, LG stated, "We expect uncertainty due to North American tariff issues to persist for the time being," adding that it will optimize its supply chain using its global production network to reduce external volatility.
The company is gradually reducing its reliance on production bases in Southeast Asia. Recently, LG significantly lowered the operating rate of its refrigerator production line at its Haiphong campus in Vietnam to below half. Plans to expand production lines at its Indonesian appliance factory have also been effectively put on hold.
The share of finished product production in North America continues to grow. The washing machine plant in Clarksville, Tennessee, has been operating at over 100% capacity since the second half of last year, prompting LG to consider a major line expansion with an additional investment of $100 million (approximately 140 billion won) at the end of last year.
North America accounted for 25.7% of LG Electronics' total sales last year, making it a key market and the largest overseas base after South Korea (41%). In fact, the sales of LG's U.S. subsidiary (LGEUS) reached 14.3 trillion won, nearly 80% of the combined sales of its major subsidiaries in Asia and South America (India, Vietnam, Thailand, Indonesia, and Brazil), which totaled 17.99 trillion won. LG aims to increase its North American supply share to 60% by expanding local sourcing and production lines by the end of the year.
Industry insiders noted, "For companies established in specific regions, improving internal structures in line with the trade policies of those countries is often the most realistic option," adding that it is essential to closely monitor market trends while balancing local productivity and profitability.
* This article has been translated by AI.
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