LG Electronics is set to expand its Vehicle Solutions (VS) and Heating, Ventilation, and Air Conditioning (ES) divisions through a regular personnel reshuffle and organizational restructuring next month, marking the one-year anniversary of CEO Ryu Jae-cheol's leadership. Last year's appointments elevated the heads of both divisions to president, emphasizing talent development, while this year focuses on organizational growth based on proven performance metrics.
According to industry sources on October 29, LG Electronics is considering elevating the applied business unit under the ES division to a divisional level or establishing a new operational organization for its U.S. production base, as well as reinforcing the new business organization for future mobility within the VS division. This strategy aims to strengthen its core revenue sources in B2B and future mobility amid technological changes and market restructuring.
In November 2022, LG Electronics promoted Eun Seok-hyun, head of the VS division, and Lee Jae-sung, head of the ES division, from vice president to president. At the same time, it established new roles under the ES division for applied business, mergers and acquisitions, and overseas sales, broadening its B2B focus.
The ES division has transitioned from standalone product sales to a comprehensive B2B solution encompassing ordering, design, production, and installation. Within less than a year of its establishment, the cumulative order amount for artificial intelligence data center (AIDC) cooling solutions surpassed 3 trillion won as of the third quarter, a fivefold increase from 600 billion won in the first half of the year.
The workforce for data center cooling research and development (R&D) is also set to double from 100 to around 200 employees. LG Electronics plans to invest approximately 220 billion won to secure a production base in Virginia, USA, while also expanding production capacity at its Pyeongtaek and Changwon factories. The slight dip in operating profit for the ES division in the third quarter, which stood at 87.2 billion won, is interpreted as a result of proactive investments to respond to new business orders.
An industry insider noted, "Given the rapid growth in business scale and overseas bases, organizational adjustments such as elevating to divisional status are inevitable."
The VS division is likely to reorganize around high-performance computing (HPC) for vehicles in line with the autonomous driving era, expanding its focus from infotainment to the autonomous driving sector. During a recent earnings conference call, LG Electronics stated, "We will strengthen our HPC business related to autonomous driving and advanced driver-assistance systems (ADAS) based on our in-vehicle infotainment (IVI) capabilities."
The structural transformation of the business is already becoming evident. LG Electronics recently agreed to supply integrated cockpits for Renault Group's first commercial software-defined vehicle (SDV) in Europe, solidifying its position as a solution partner rather than just a parts manufacturer. The cumulative operating profit for the VS division in the third quarter reached 593.1 billion won, surpassing last year's total annual performance.
CEO Ryu Jae-cheol emphasized earlier this year, "We will ensure that our B2B businesses in commercial heating and cooling and automotive sectors drive profitability-based growth."
* This article has been translated by AI.
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