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LG Electronics Makes Bold Investments in Future Businesses
Number of Affiliates Grows for First Time in Four Years
LG Electronics Makes Bold Investments in Future Businesses
  • By Kim Eun-jin
  • March 11, 2019, 09:54
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LG Electronics Inc. has become more aggressive in investing in new businesses after Koo Kwang-mo took office as chairman of LG Group last year.

LG Electronics Inc. has become more aggressive in advancing into new businesses after Koo Kwang-mo took office as chairman of LG Group last year. As the company has made bold investments in future growth engines, the number of its subsidiaries has greatly increased for the first time in four years. The electronics giant is expected to continue investment in and cooperation with technology companies to secure competitiveness in automotive electronics, artificial intelligence (AI) and robotics. Moreover, not only LG Electronics but also LG Group as a whole are expected to accelerate disposal of non-core businesses.

The number of consolidated subsidiaries of LG Electronics stood at 139 in 2018, up 16 from 123 a year earlier, according to last year’s audit report submitted by LG Electronics on March 10. LG Electronics saw the number of its subsidiaries increase for the first time in four years after 2014. The figure rose from 138 in 2013 to 141 in 2014 but slid to 125 in 2015 and 123 in 2016. In short, LG Electronics’ strategy, which focused on downsizing, has been changed.

The number of subsidiaries of LG Electronics sharply increased last year largely due to the fact that the company acquired Austria’s ZKW, the world’s largest automotive lighting and headlight systems provider, for 1.40 trillion won (US$1.23 billion). It was the biggest acquisition made by LG Electronics in history. After the acquisition of ZKW, a total of 14 companies, such as holding company and production corporations in Austria and production corporations in Slovakia, China, Mexico and the Czech Republic, have become new subsidiaries of LG Electronics.

In addition, “LG Technology Ventures” and “LG Electronics Fund” have become subsidiaries. LG Technology Ventures, a venture investment firm established in Silicon Valley last year, operates venture company investment funds jointly created by LG Electronics and LG Group’s other affiliates, such as LG Chem Ltd., LG Display Co. and LG Uplus Corp.

Starting with the investment in Ridecell, an autonomous driving software venture based in Silicon Valley, in November last year, LG Technology Ventures has made an investment in May Mobility, a U.S.-based startup developing self-driving shuttle buses, and is aggressively investing in automotive electronic business, which LG Electronics considers one of its future growth engines.

Its investment in the AI and robot sectors is also notable. LG Electronics made an equity investment in AI startup “Acryl Co.,” industrial robot manufacturing firm “Robostar Co.” and U.S.-based robot developer “Bossa Nova Robotics Inc.” last year.

LG Chem also saw the number of subsidiaries increase last year. It added seven new units, boosting the total number to 45. LG Chem bought Ugimag Korea Co., which manufactures and sells permanent magnets used in small motors for cars and home appliances, for 23.30 billion won (US$20.49 million) in 2018 as well as Uniseal Inc., a U.S.-based supplier of specialty adhesives and sealants for cars.

Furthermore, LG Uplus, a distant third player in the wireless market, has finally decided to take over CJ HelloVision, the nation's No. 1 cable TV company, to change the landscape in the domestic pay TV market. An official from the business community said, “LG Electronics expanded its investments in future growth engines, including automotive electronic, AI and robot, last year and is accelerating business reorganization by closing down its non-core fuel cell business. The is expected to pursue M&As and make investments in a more decisive manner this year.”