[CES 2024] LG to invest $1.5B in M&A this year, eyeing 'extended reality' deal

LG Electronics will invest 10 trillion won in 2024, focusing on M&A deals, R&D, and facilities. The company seeks opportunities in extended reality and mobility, and hopes to overcome supply chain hurdles by strengthening its B2B businesses.

LG Electronics CEO William Cho speaks to Korean press in Las Vegas on Wednesday, local time, at CES 2024 [LG ELECTRONICS]

LG Electronics will invest 10 trillion won ($8 billion) this year, two trillion won of which will be spent on M&A deals, possibly in the extended reality (XR) business.

Another 4.5 trillion won will go to research and development (R&D) while 3.5 trillion won will be allocated to facilities.

“We are eyeing an opportunity in XR,” LG Electronics CEO William Cho said at a news conference during CES 2024 in Las Vegas on Wednesday, local time.

“M&A could mean entirely acquiring the company or partially acquiring it and managing it. Last year, we established a new unit dedicated to XR under HE [Home Entertainment] division. We are going to do business in XR and we are delving into it through partnerships.”

LG Electronics may have scrapped its smartphone business due to low profitability in 2021, but the experience could be of help in developing XR devices, according to Cho.

“We have the manufacturing capacity of accessible devices,” Cho said. “We have experience in making them smaller and, lighter as we have manufactured smartphones before, and we also have the platform. We are in the process of various investments and partnerships and in the center of that stands XR and MR [mixed reality] devices.”

Cho did forecast, however, that this year will not be the most favorable time to do business, as supply chain risks persist.

He plans to overcome those hurdles by fortifying LG's B2B businesses — particularly in the vehicle space.

“The VS business reached the target of 10 trillion won in sales last year, tentatively, and logged two-digit growth,” said Eun Seok-hyun, president of LG's vehicle component solutions (VS) business, at the news conference.

“This year, we also target two-digit growth. We are mulling over various portfolios like the Alpha-able [LG's future mobility concept]. It is true that the EV market is slowing down, but our business is not only centered on EVs, but also encompasses infotainment, lighting and so on. Sixty percent of last year's revenue derived from infotainment.”

LG's VS division turned a profit last year for the first time in a decade.

LG is also targeting emerging markets in Latin America and Asia for its heating, ventilation and air conditioning (HVAC) business, which is another main pillar of its B2B segment.

The company plans to fortify its core product lineup, including motors and compressors, and build an R&D center in Europe following the opening of its heat pump lab in Alaska last year.

“B2B is less influenced by the economic conditions compared to B2C,” LG said. “So once you are on the right track, you can expect stable sales and profit. LG targets at least 40 trillion won of revenue by 2030 by focusing on high value business.”

BY JIN EUN-SOO [jin.eunsoo@joongang.co.kr]