Intel, LG Electronics discussing 'smart factory' deal

LG Electronics is in talks with Intel to provide smart factory services, aiming for 300 billion won in orders by year-end.

LG Electronics Executive Vice President Jeong Dae-hwa, left, and Song Shi-yong, head of the smart factory business division, answer questions from press about the company's new business at the LG Digital Park Complex in Pyeongtaek, Gyeonggi, on Thursday. [LG ELECTRONICS]

PYEONGTAEK, Gyeonggi — LG Electronics is in talks with Intel about providing the American chip giant with smart factory services as it wades into the enterprise AI sector.

Song Shi-young, head of LG Electronics' smart factory business division, said the two parties “have met and discussions are underway,” during a press tour of its Smart Factory Acceleration Center in Pyeongtaek, Gyeonggi on Thursday.

LG Electronics has entered talks with, or has secured offers from, 20 firms worth 200 billion won ($144.8 million) in total since establishing the smart factory business division within its Production Engineering Research Institute (PRI). The Korean firm did not disclose the specific enterprises but said that its offerings are most popular in North America and that it has received orders from domestic companies with factories there.

The electronics maker is pursuing an end-to-end smart factory package including consulting, planning, operation and overall maintenance.

LG utilizes digital twin technology to generate projections and simulations of smart factories in operation and deploys autonomous mobile robots (AMR) tailored to each client's manufacturing needs.

An autonomous multi-joint vertical robot developed by LG Electronics’ Production engineering Research Institute performs the process of supplying semiconductor wafers. [LG ELECTRONICS]

AMRs are upgraded versions of automated guided vehicles (AGVs) which can function autonomously, without any supplementary infrastructure, to determine their location. Previously, AGVs relied on factors such as QR markers, magnetic lines or reflectors to locate themselves, meaning humans had to reinstall those elements whenever paths needed to be altered.

AMRs operate in LG’s manufacturing plants in Changwon, South Gyeongsang, and Tennessee.

“Robots are currently tightening the screws on our dryer products as we speak,” an LG official said during the tour.

LG also showed off an AI-powered camera and sound anomaly detector called PRAI-Cam and PRAI Sound respectively. After training on what is considered a “normal situation” for around five minutes, the gadgets can immediately detect, and alert managers to, sounds that could indicate potential problems on the site.

LG has delved into generative AI — and powers its own large language model, Exaone — but those proprietary technologies are largely not integrated into the smart factory lineup according to Jeong Dae-hwa, executive vice president and head of PRI at LG Electronics.

“I believe we made a wise choice by using the infrastructure that others have largely built,” Jeong said. “When it comes to robots, there are extremely cheap ones available in China. However, the real skill lies in how much you can effectively utilize these robots. Due to the lack of expertise in this area, companies are looking to us to provide optimal solutions through our smart factory capabilities.”

The company, when pressed, declined to provide data supporting the relative efficiency of LG's smart factory lineup, citing client privacy and the fact that such numbers differ based on customer demands.

“Each order is handled on a case-by-case basis, so it's difficult for me to claim that our solutions provide an absolute increase, let's say, of 30 percent of 50 percent,” Song said.

The company is, however, confident enough in its products that it aims to 300 billion won in orders by the end of this year and to generate 200 billion won of revenue independently of the company's internal earnings. Its current clients, or potential clients, include manufacturing plants in semiconductors, secondary batteries, auto parts and electronics, and it hopes to expand further into bio, heavy equipment and food and beverage.

The global smart factory market is projected to grow to $268.5 billion by 2030, according to Precedence Research. By that time, LG hopes to generate over 1 trillion won in the sector. The company believes it can quickly gain dominance in the domestic market as it faces no real competitors — as of now.

“Our role models for the business are overseas companies like ABB and Siemens,” Song said. “It’s challenging to find domestic companies that cover the entire customer journey like we do. We go beyond just consulting; we combine both hardware and software to provide a fully integrated digital twin-based operation system. I would like you to understand our business to deliver a comprehensive solution where hardware and software cannot be separated.”

BY LEE JAE-LIM [lee.jaelim@joongang.co.kr]