Parts business to boost LG's new holding firm
Silicon Works' research center in Daejeon, south of Seoul, is seen in this photo, Sunday. Korea Times file
By Kim Yoo-chul
After confirming the official launch of LX Group, a spin-off holding company from the LG Group, investors' attention is on how Chairman Koo Bon-joon will formulate his thoughts into detailed corporate growth focusing on its semiconductor affiliate, Silicon Works.
Silicon Works is the country's largest fabless (non-manufacturing) company and is set to diversify its business portfolio under this new leadership, given Koo's strong interest and successful track record in managing component-oriented businesses, according to people familiar with the issue.
“Chairman Koo is set to focus on expanding the group's business portfolio, with Silicon Works taking a central role. Given Koo's rich and wide business networks in the business-to-business (B2B) industry, in terms of growth, what Silicon Works' role will be for the group is likely the top consideration for the group chairman,” a source said Sunday.
The total assets of LX Group are estimated at 8 trillion won ($7 billion). The new holding company has five affiliates under its wing ― LG International, LG Hausys, LG MMA, Pantos and Silicon Works.
LX Group Chairman Koo Bon-joon
Koo, the younger brother of the late LG Chairman Koo Bon-moo, and uncle of the current LG Chairman Koo Kwang-mo, was a “hidden force” in winning massive financial assistance from Philips of the Netherlands to launch a display joint venture, LG Philips LCD, decades ago, which is now LG Display. A graduate of the University of Chicago, Koo was also the figure to lay some of the groundwork for LG Display's expansion in the global LCD industry. He was the chief executive of LG Semiconductor back in 1997.
Better known as a “cost-cutter” and the person who understands component-related businesses from a profit standpoint, Koo's direct and task-driven personality brought mixed results when he took the top positions at LG Electronics, LG International and LG Philips LCD. At LG Philips LCD and LG International, Koo significantly helped the affiliates see steep rises in terms of market share and profits. While some investors were dissatisfied about his term at LG Electronics, he was known as the person who helped LG win some “initial backing” in its vehicle component business, another source said.
“Koo did well at LG Display and LG International, and he impressed investors while he was at LG Electronics, as he helped it get into the vehicle component business. Simply put, he has a greater interest in growing parts-oriented businesses,” the source said, adding that he expects LX to allocate more spending on semiconductors and batteries.
Silicon Works is eyeing the digital semiconductor market. It is in the process of developing digital semiconductors, which could possibly be used for appliances that use motors. Most of Silicon Works' annual sales come from the sale of customized display driver chips to LG Display.
“With Silicon Works, LG International could see its business growth focus on rechargeable batteries,” the person said. Silicon Works is expected to generate 1.47 trillion won in revenue this year, with the company reporting 135 billion won as its 2021 operating profit.
On a related note, Silicon Works is said to have started hiring research personnel for the development of silicon carbide and gallium nitride chips, both of which have been identified as strategic materials.