LG Electronics continues its focus on auto parts business

The automotive parts business of LG Electronics racked up contracts totaling 8 trillion won ($6.1 billion) during the first half of the year, the company said Tuesday.

A computer-generated image of a driving cockpit system with LG Electronics' infotainment system [LG ELECTRONICS]

The automotive parts business of LG Electronics racked up contracts totaling 8 trillion won ($6.1 billion) during the first half of the year, the company said Tuesday.

Backlogged auto parts orders totaled 60 trillion won as of the end of 2021. The number is estimated to reach 65 trillion this year.

LG Electronics recently landed a deal to supply in-car infotainment systems to a European carmaker, and another to supply 5G high-performance telematics systems — telecommunication devices and software to store and transmit data in a vehicle — to a Japanese carmaker, but the company did not disclose details of the contracts.

The company's auto parts business has three key pillars: infotainment systems, automotive lighting systems of its subsidiary ZKW and electric vehicle (EV) powertrains of LG Magna e-Powertrain.

The company is currently supplying infotainment systems to Germany’s Mercedes-Benz AG, France’s Renault and General Motors.

ZKW, Austria-based automotive lighting subsidiary acquired by LG Electronics in 2018, is supplying headlamps to luxury carmakers, including BMW, Audi and Porsche.

LG Magna e-Powertrain, a joint venture 51 percent owned by LG Electronics and the rest by Magna International, broke ground on a 260,000 square foot (24,150-square-meter), $100 million EV component plant in Mexico.

In 2021, LG Electronics' auto parts revenue grew 24 percent to 6.7 trillion won amid the global shortage of auto chips.

LG Electronics has been ramping up investments in the automotive sector, one of the new business areas picked by the company for its growth potential, while exiting from its smartphone and solar panel businesses.

LG Electronics claimed 22.7 percent in the telematics market worldwide in the first quarter, according to market tracker Strategy Analytics.

“We will continue to deliver differentiated value to global carmakers with LG Electronics’ technological capabilities across all key sectors of our automotive business,” said Eun Seok-hyun, president of the auto parts unit.

With the increased orders, the electronics maker’s auto parts business, which posted losses since 2016, is expected to turn profit for the first time in the second quarter of this year. In the January-March period, the auto parts unit reported quarterly revenue of 1.9 trillion won and an operating loss of 62 billion won.

The earnings report for the March-June period is set to be released on Thursday.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]