Supporting Chillers in Data Centers... Jo Joo-wan, LG Electronics President: "Collaboration with MS, a Great Business Opportunity"

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Cho Ju-wan, CEO of LG Electronics, is answering questions at a press conference held in Las Vegas, USA, on the 8th (local time). Photo by LG Electronics

Jo Joo-wan, CEO and President of LG Electronics, emphasized on the 8th (local time) at a press conference held in Las Vegas, USA, that through strategic collaboration with Microsoft (MS), LG Electronics' ultra-large cooling system 'Chiller' will be installed in numerous data centers built by MS, calling it a "great opportunity."

When asked about the difference between the collaboration of LG Electronics and MS and that of Samsung Electronics and MS, Jo said, "We are jointly developing AI agents," adding, "The focus is on experiences in smart homes and in-vehicle environments. Applying Copilot to TVs to improve voice recognition and sound quality is a key aspect."

He particularly noted, "The collaboration with MS presents a very significant business opportunity because MS will build numerous data centers where LG Chillers will be installed," and added, "When a lot of heat is generated, energy management becomes very important. I believe this will be a growth driver for the ES division going forward."

Earlier, on the 6th, Jo announced the strategic partnership with MS at the 'LG World Premiere' held at the Mandalay Bay Convention Center in Las Vegas, USA. Previously, LG Electronics had applied MS's voice recognition and synthesis technologies to its mobile AI home hub (project name: Q9) to facilitate smoother communication with customers. Now, they plan to develop AI agents that predict customers' needs and preferences. These AI agents will be utilized in various spaces, from homes to vehicles, hotels, and offices.

Regarding the company's robotics business, Jo said, "Depending on the situation, there may be opportunities for additional equity investments." Last March, LG Electronics invested $60 million (approximately 80 billion KRW) in Bear Robotics, an AI-based autonomous service robot startup headquartered in Redwood City, Silicon Valley, USA, signing a new share subscription agreement to acquire shares in Bear Robotics. LG Electronics sees the paradigm of commercial robots shifting to AI-based software-defined robots (SDR) and has acquired Bear Robotics, which has strengths in this area. This year, they plan to launch the AI robot 'Mobile AI Home Hub (Q9).'

Jo also stated, "There are various areas for robot equity investments, so we are considering where to focus. Hypothetically, we are concentrating on the 'Food & Beverage' sector. Analyzing past data shows this sector has grown the most, so we are focusing our efforts there."

Regarding the recently announced preliminary Q4 results, he said, "Our company faces the challenge of 'high in the first half, low in the second half.' We performed well in the first half, but results tend to decline in the second half. We will work to improve this," adding, "As the B2B proportion increases, results will improve. This will allow for more balanced sales and profits in the second half as well."

LG Electronics announced preliminary consolidated Q4 results yesterday, with sales of 22.7775 trillion KRW and operating profit of 146.1 billion KRW. While sales reached a record high last year, operating profit sharply declined due to increased logistics and marketing costs. Jo emphasized about the decreased operating profit, "Logistics costs had a significant impact. Especially in Q3, demand surged for securing shipping companies due to requests from Chinese firms, increasing costs by 60%. From October to December, TV demand dropped. Holding TV inventory for too long leads to significant price drops, so heavy promotions were necessary. We did not anticipate these situations. The fundamentals have not collapsed."

Jo reflected, "It is positive that changes in business methods and business model innovations, such as home appliance subscriptions and webOS advertising/content businesses, which respond to market and customer demand changes, are producing some results," and emphasized, "Considering the ongoing uncertainty in unprecedented markets and competitive environments, a different level of thoughtful and meticulous execution strategy is now required." This reflects an ambition to refine management strategies and secure structural competitiveness in business to achieve qualitative growth while always considering the rapidly changing global market and competitive environment.

Two years ago, LG Electronics presented and began implementing the '2030 Future Vision' as a mid- to long-term goal. The blueprint envisions expanding the existing business, which has continued innovation centered on home appliances, into mobility and commercial spaces, and becoming a 'Smart Life Solution' company that connects and expands diverse customer experiences through decades of accumulated customer understanding, know-how, and technological capabilities.

However, geopolitical risks such as potential changes in major countries' trade policies due to the upcoming second term of President Donald Trump's administration are causing concern. Competition with Chinese companies is also shifting from price to technology, requiring preparation.

Jo stated, "Although the situation is difficult, there are still various opportunities in the market and among customers," emphasizing, "Even amid change, we will focus on differentiated customer value that will not change and create continuous growth opportunities across the business."

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