LG solidifies leadership in new technologies
An LG Display researcher conducts quality checks at the firm’s eighth-generation display line in Paju, Gyeonggi Province, Wednesday.
By Kim Yoo-chul
LG Group Chairman Koo Bon-moo
Shown is a 5-inch flexible display developed by LG Display. LG Electronics plans to release its first smartphone using the display in the latter half of the year. / Courtesy of LG Group
LG Group, one of the nation’s top three conglomerates, has bounced back on the back of a major comeback of its smartphone business, which has been led by chairman Koo Bon-moo.
Despite the bleak market outlook, the chairman has been consistent in investing in developing advanced technology and new products, which have begun yielding visible returns.
“Since our chairman Koo urged LG executives to fundamentally change their way of thinking and working style in September last year, LG has shown clear improvements in technologies,” LG said in a statement to The Korea Times, Wednesday.
The company highlighted its latest manufacturing technologies in OLED, flexible displays and car batteries are wooing customers.
“LG identified market leadership and faster implementation as this year’s top corporate initiatives. Our strategy to introduce products that can shake up the global market hasn’t changed,” said a group spokesman, adding LG wants to become a “serious game changer” not just a “big challenger.”
Citing the current warm response to its latest OLED TVs, ultra-high definition (UHD) TVs and Optimus line of devices, the spokesman said LG is getting speedier to match up with the consumer demand and to lead its rivals.
“Without changes and offering creative value to customers, LG can’t survive and will be gone from the market. Several recent changes are because of a sense of such crisis agreed by LG’s top management,” the spokesman said.
“Sometimes, using a sense of urgency helps a firm to shake up key things. If you run your business that way all the time, you burn out employees quickly. But the thing is LG employees are working hard by their own will as they see improvements,” said a 36-year-old technician at LG Electronics’ research lab in Seoul.
Koo’s crisis strategy and leadership have paid off, with major affiliates of the group showing clear signs of recovery.
LG Electronics, the most crucial affiliate of the group, surprised the market by reporting 14.10 trillion won in revenue during the first three months of this year. Operating profit for that period came to 349 billion won.
LG Electronics spokesman G.W. Kim said stronger smartphone sales were the driving force that lifted the affiliate. LG broke the “10 million mark” in its quarterly smartphone sales in the latest quarter, helped by the popularity of its Optimus-branded smartphones.
The statement confirmed LG Electronics will diversify its smartphone lineup from premium models to affordable ones such as its F-Series and L-Series 2. The world’s No. 2 TV manufacturer is going to expand its OLED TV lineup.
“By hiring more research staff, LG’s air-conditioning and home appliance businesses will expand business territories to the growing low-end sector for more profit. LG shifted toward an improvement of profit margin,” said the statement.
LG Display, the display-making unit of the group, continued its winning streaks in profit for the fourth consecutive quarter as its in-house IPS display technology is widely being used in computing devices from PCs to smartphones.
“What’s impressive is that we overcame the industry’s seasonal factors by strengthening our client base,” said LG Display spokesman Frank Lee. During the first quarter, the display affiliate reported 6.8 trillion won in revenue, up from 10 percent year-on-year, with operating profit of 151 billion won.
LG Chem, the petrochemical affiliate, has also responded to the chairman’s requests by growing its quarterly revenue and profit. During the January-March period, LG Chem made 5.7 trillion won in quarterly revenue. Operating profit was 408 billion won.
“Three-D films, films to be used in touch screen panels, OLED materials and glasses are killer business items,” said C.S. Song, a spokesman at LG Chem, stating it became the world’s No. 2 supplier of small rechargeable batteries during the last three months of 2012 after passing Japan’s Panasonic.
LG Hausys, the building materials affiliate and the nation’s smallest mobile carrier LG Uplus also strengthened its bottom line by selling premium products and enticing more subscribers to use its LTE advanced networks.
Market leader
Koo isn’t satisfied with increased earnings. In a bid for corporate sustainability, LG plans to build an R&D complex in western Seoul for an investment of 3.2 trillion won.
The LG Science Park will house 30,000 research personnel. Research divisions at the group’s 11 units will move to the new building, which is scheduled to open in 2020.
“The complex will be used for the development of next-generation technologies and patents. The complex will also house SMEs for balanced growth and to create better eco-systems. LG is giving more credit to researchers as market leading products can come only if research personnel have authority,” the group’s statement read.
LG is also changing its working culture to improve efficiency.
“LG Uplus implements “SMART” meeting styles. SMART means study, management, assignment, respect and time. All internal meetings should be finished within an hour,” said the statement.
LG beats its bitter cross-town rival Samsung in the race for OLED TVs by selling its 55-inch OLED TVs. Its UHD TV models are also receiving warm responses from influential tech review sites and publications. LG Display is investing 700 billion won to build a new line for OLED panels.