What Display Daily Thinks: Is there a scenario where there is no LG Display? Yes. When you start to see these kinds of stories you get a sense that there are questions being asked at a level where enough pressure can be applied to force change. Does that mean LG gets out of the display business? No. It just means that it has to pick what works, and discard what doesn’t, and that is going to be painful, like removing an appendage, a major surgery that no one is looking forward to having.
The Korean display industry is not going to lose everything that is positive and valuable about LG Display (such as automotive displays), that’s a certainty. However, without LG Display, there will be a vacuum in the market that Samsung alone can’t fill.
LG Group’s Automotive Sector Thrives, but Display Business Faces Challenges
A report in Nikkei Asia focuses on LG Group under the leadership of Chairman Koo Kwang-mo. The report highlights how he has successfully pivoted into the fast-growing automotive sector, showing remarkable growth in the past five years. However, his conglomerate faces challenges in effectively managing struggling businesses with the display division being a particular issue.
Chairman Koo maintains a unique leadership style by actively seeking input from workers and managers during his visits to factories and research centers. This approach aligns with LG’s bottom-up culture, which values harmony and organizational flexibility. The group has a history of leveraging these strengths, including the recruitment of outside talent, to expand its business portfolio.
The automotive battery business, managed by CEO Kwon Young-soo at LG Energy Solution, has emerged as a major growth engine for the group. LG Energy’s market capitalization has skyrocketed to 129 trillion won ($99.4 billion) and now surpasses that of the longer-established LG Electronics, constituting 55% of the total valuation of LG’s publicly listed companies.
Under the leadership of CEO Shin Hak-cheol, LG Chem, which holds an 81.8% stake in LG Energy Solution, has successfully executed a growth strategy after the listing of its battery unit. Shin, a former executive at 3M, brought valuable experience in global business development.
LG Electronics, led by CEO William Cho, has been diligently expanding its automotive components business alongside its core segments of home appliances and televisions. Notably, LG Electronics formed a joint venture for electric vehicle motors with a Canadian parts manufacturer and recruited executives from renowned companies like Bosch to strengthen relationships with major automakers. The company’s vehicle components segment achieved profitability for the first time last year.
LG Group’s ventures into the automotive sector have thrived due to the global proliferation of electric vehicles. However, the conglomerate has been slower in addressing and resolving challenges in other areas. Only in 2021 did LG decide to exit the smartphone business after six consecutive years of losses, as it struggled against rising Chinese competitors and failed to catch up effectively.
Currently, LG Group faces substantial losses in its display business, with LG Display reporting its largest-ever net loss of 3.19 trillion won ($2.44 billion) in 2022. Similar to the smartphone business, intense commoditization and the rapid progress of Chinese companies have made it difficult for LG Display to envision a path to profitability. While LG Electronics successfully transitioned employees from smartphones to the in-vehicle division, restructuring the struggling display business presents challenges, particularly concerning the job security of around 30,000 LG Display employees. Once a global leader that displaced Japanese electronics giants, increasing competition from Chinese companies may just prove to be too much for LG Display.
