CEO Lyu Jae-cheol Underscores “Flawless Execution” to Build a Winning Competitive Advantage
LG Electronics (LG) CEO Lyu Jae-cheol held a press briefing with Korean media in Las Vegas on January 7 (local time), outlining the company’s management direction and priorities. He presented a strategy built on three pillars: reinforcing fundamental competitiveness, accelerating the transition to a high-performance portfolio and strengthening a profitability-based growth structure.
Lyu said LG must respond to a business environment in which industry boundaries, competitive dynamics and technological cycles are changing faster than ever before.
“The paradigms of industries and competition are shifting at unprecedented speed. Matching the pace of others will not be enough. We must see the competitive ecosystem clearly and move faster and execute better than our peers to remain competitive.”
Reinforcing Fundamental Competitiveness and Technology Leadership
LG will reinforce its fundamental competitiveness by raising the baseline of performance across its entire value chain and widening the technology gap with competitors.
This effort rests on two pillars:
- Quality, Cost and Delivery (QCD) excellence
- Technology and R&D leadership that creates sustainable competitive advantage
To systematically upgrade performance in product quality, cost structure, design and speed, LG has established an Innovation Drive Division reporting directly to the CEO. This organization will function as a company-wide control tower for transformation across development, manufacturing, supply chain and sales. Lyu said he will personally oversee breakthrough targets and progress in each area.
In R&D, LG will further concentrate resources on “Winning Tech” – technologies selected based on customer value, business potential and technological competitiveness. These technologies will be deepened and scaled to lead markets rather than simply follow trends. In areas expected to become long-term industry growth drivers, LG will expand partnerships with leading global players to strengthen world-class development and commercialization capabilities.
Accelerating the Transition to a High-Performance Business Portfolio
LG will accelerate the transition to a high-performance portfolio centered on businesses with stronger growth, profitability and resilience to market cycles.
Key areas of qualitative growth include:
- B2B businesses such as vehicle solutions and HVAC
- Non-hardware businesses including product & service subscriptions and the webOS platform
- Online businesses led by direct-to-consumer (D2C) channels
This portfolio shift is already well underway. The share of these businesses in LG’s total revenue increased from about 29 percent in 2021 to 45 percent in the second half of last year, while their share of operating profit rose from 21 percent to about 90 percent over the same period. LG plans to further accelerate this trend through continued investment, business model innovation and tighter execution.
The vehicle solutions business is expected to deliver its highest annual performance this year, supported by a strong order backlog and growing demand for components for software-defined vehicles (SDVs) and AI-defined vehicles (AIDVs).
The HVAC business is positioning itself for future growth through cooling solutions for AI data centers (AIDCs), while the smart factory solutions business recorded KRW 500 billion in orders last year, just two years after commercialization.
In non-hardware businesses, LG’s product subscription model exceeded KRW 2 trillion in annual revenue, and the webOS platform continues to grow at a double-digit rate, with more than 260 million webOS-enabled devices now in use worldwide. LG’s online D2C business is also gaining momentum, with November sales – boosted by Black Friday – rising more than 40 percent year-on-year.
Strengthening the Profitability-Based Growth Structure Through AX
LG will use AI transformation (AX) to strengthen its profitability-based growth structure by improving speed, productivity and execution across the organization.
While digital transformation (DX) optimized individual tasks and processes, AX is designed to integrate them end-to-end, enabling more autonomous, data-driven and faster decision-making. LG has set a goal to increase overall productivity by 30 percent within two to three years, allowing employees to devote more time to higher-value work, innovation and professional expertise.
AI is already being applied across development, sales, supply chain management, procurement and marketing. LG’s internal chatbot, LGenie – originally built to support routine tasks – is evolving into a company-wide AI agent platform based on EXAONE, LG AI Research’s foundation model, and integrated with external generative AI technologies including Microsoft Azure AI Services, OpenAI’s ChatGPT and Google’s Gemini.
Increasing Investment for Future Growth
Despite ongoing global uncertainty, LG plans to increase investment this year to reinforce its long-term competitiveness and accelerate future growth, while maintaining strict discipline in how resources are allocated.
Total resources devoted to future growth – including capital expenditures, software and IT, patents, and strategic investments such as M&A – are expected to rise by more than 40 percent year-on-year. A portion of this funding will come from cash generated through the IPO of LG Electronics India.
Investment will be focused on areas where LG can best leverage its existing strengths, including AI Home, smart factory solutions, AI data center cooling and robotics. In parallel, LG will actively pursue strategic partnerships to expand capabilities and unlock new growth opportunities.
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