Decreased TV sales significantly reduce LG Electronics' profit by half
LG Electronics, a leading electronics company based in Seoul, South Korea, has announced a new growth strategy that centres heavily on expanding its Heating, Ventilation, and Air Conditioning (HVAC) business. The company aims to position itself as a key player in the industrial and AI data center cooling markets, with a goal of reaching approximately 20 trillion Korean won ($14.6 billion) in annual sales by 2030.
This ambitious strategy is part of a broader "3B strategy" that includes organic growth, strategic acquisitions, and diversification. LG plans to grow its non-hardware service revenue to account for 20 percent of its HVAC business, emphasizing recurring, high-margin revenues.
In terms of regional focus, LG is adopting a strategy of localized, end-to-end value chains, tailoring products and services for specific markets around the world to better respond to regional demand patterns. While explicit regional breakdowns are not detailed, the company's expansion appears to target major international markets, given the global nature of AI data centers and industrial HVAC demand.
In addition to its HVAC focus, LG is also expanding into B2B sectors such as vehicle components and smart factory solutions, and direct-to-consumer online sales via its platform, LGE.COM. These additional growth drivers are expected to provide steady revenue streams, less affected by consumer market fluctuations.
One of LG's recent moves in this direction is its acquisition of Norway's OSO Hotwater to expand its global HVAC presence. The company is also in talks with Nvidia to supply cooling solutions for AI servers, further solidifying its position in the AI data center market.
Despite these strategic moves, LG Electronics is currently facing mounting tariff pressures in the second half of the year, particularly affecting its TV sales. However, the company's CEO has highlighted a growth strategy focused on the Global South, which may help mitigate the impact of these pressures.
At the recent International Builders' Show (IBS 2025) held in Las Vegas, LG Electronics showcased its AI-powered devices, with Lyu Jae-cheol, head of LG Electronics' home appliance division, in attendance. Despite the tariff pressures, the exhibition was not related to these issues, and Lyu Jae-cheol is not reported to be directly involved in the tariff discussions.
In conclusion, LG Electronics is positioning itself as a major player in the industrial and AI data center HVAC solutions market, with a goal of reaching $14.6 billion in annual sales by 2030. The company's growth strategy involves expanding B2B HVAC with advanced hardware and non-hardware services, strategic acquisitions, localized value chains, and a focus on the Global South. Despite current tariff pressures, LG Electronics remains committed to its growth strategy and is continuing to make strategic moves to expand its presence in the global market.
- LG Electronics, with its new strategy, intends to move beyond just hardware and venture into areas like vehicle components, smart factory solutions, and direct-to-consumer online sales, aiming for 20% of its HVAC business from non-hardware service revenue.
- To cater to different global markets, LG is adopting localized, end-to-end value chains, customizing products and services according to specific market demands, particularly targeting major international markets.
- Beyond the HVAC industry, LG is also exploring opportunities in cutting-edge technologies, such as AI, as evident in its talks with Nvidia to supply cooling solutions for AI servers.
- The entertainment and arts industries might benefit from LG's expansion into global HVAC solutions, given the increasing demand for energy-efficient cooling systems in data centers, powering various digital content platforms.
