LG Raises Tech Investment, Eyes Record Sales
By Kim Tong-hyung
Staff Reporter
LG Group will spend around 15 trillion won (about $13.3 billion) this year, up 28 percent from 2009, to improve competitiveness in key businesses and tap growth in emerging sectors such as solar cells.
The announced figure would represent the largest-ever annual investment by LG, which counts LG Electronics, LG Display and LG Chem among its key affiliates, and the group is backing its planned splurge with bullish forecasts for a lucrative 2010.
LG is targeting 135 trillion won in revenue for the whole of 2010, which would be an 8 percent increase from the projected 125 trillion won for last year and mark a new high for the conglomerate.
Much of the growth is expected come from its major markets in consumer electronics, mobile phones and liquid crystal displays (LCDs), LG officials said.
``We have to accelerate our efforts in preparing for the future,'' LG Chairman Koo Bon-moo said in a statement.
``There is a need for us to invest to introduce gradual innovation and improve our current business. We also need to look ahead in the mid-to-long term future and advance our capabilities in fundamental technologies that will give us a chance to take the lead when the changing needs of our customers see the market evolve in a new way.''
The commitment of 15 trillion won for this year would represent a 28 percent increase from the 11.7 trillion won LG invested in 2009. About 11.3 trillion won from the budget will be spent on equipment and facilities, which is a 30 percent increase from the 8.7 trillion won in 2009, LG said.
LG Display, which trails Samsung Electronics as the world's No. 2 LCD maker, will have spent about 3.3 trillion won by the end of the year to expand its eighth-generation (G8) LCD production line in Paju, Gyeonngi Province, to meet the increasing demand for large-sized displays used in flat-screen televisions.
LG Electronics, the world's second-largest flat-screen television maker and No. 3 handset vendor, will spend 1.5 trillion won to enlarge its solar cell production line and also strengthen production at its key manufacturing plants overseas.
LG Innotek, which controls the group's light-emitting diode (LED)-related business, is planning to expand its production lines for LED packages in Paju and LED chips in Gwangju, while LG Chem is looking to improve its facilities for LCD glass substrates and rechargeable batteries.
LG Telecom, the telecommunications unit, is looking to improve its network infrastructure for wireless communications and broadband Internet services.
Flexing R&D Muscle
LG will also be spending 3.7 trillion won on research and development (R&D), a 23 percent increase from the 3 trillion won last year, to advance its technologies in consumer electronics, wireless communications and next-generation displays.
About 2.1 trillion won of the R&D budget will be spent by LG Electronics, which is looking to strengthen its position in smartphones, mobile Internet devices, three-dimensional (3D) television and also pursue renewable energy.
LG Display is looking to spend on improving its technologies for LED, active-matrix organic LED (AMOLED), 3D panels and also displays for e-book readers, a growing consumer segment.
LG Chem will increase its investment in developing technologies for hybrid and electric vehicles, while LG Telecom plans to develop solutions for fourth-generation (4G) candidate technologies such as Long Term Evolution (LTE).
LG's goal of reaching 135 trillion won in 2010 revenue probably hangs on the performance of LG Electronics, the crown jewel of the group's corporate empire and bitter domestic rival of Samsung Electronics, the world's largest electronics maker.
LG Electronics is expecting 59 trillion won in sales for this year, about a 10 percent increase from its projections for 2009, with much of the growth expected to be generated by sales of consumer electronics and handsets. The company is also seeking more opportunities in business-to-business (B2B) segments and looking to establish markets for its solar cell products.
Improving its competitiveness in handsets will be critical for LG Electronics. Although the company trails only Nokia and Samsung in the overall mobile-phone market, its share in smartphones, which provide larger margins than conventional handsets, has been miniscule, adding to the pressure to deliver a product that could compete with the iPhones and Blackberries of the world.
LG Electronics trails Samsung as the runner-up in flat-screen televisions, but expects increasing competition from rivals such as Sony for the No. 2 spot.
LG Display, which is the industry's leading provider of large-sized LCD panels used in televisions, is vowing to extend its presence to LED-based LCDs and 3D television panels.
LG Chem is expecting to benefit from a growing market for batteries in hybrid and electric vehicles and also looking to tap into emerging economies such as China.