LG doubles down on B2B and AI to sharpen execution and margins
LG Electronics is reshaping around enterprise customers and AI to move faster and deliver steadier profits heading into 2026. CEO Lyu Jae-cheol underscored the need to out-execute, not just keep pace. The company reported more than 88 trillion KRW (about $65 billion) in 2024 revenue and employs over 75,000 people worldwide.
The strategy in three moves
- Expand B2B across vehicle components, HVAC, smart factory solutions, and AI-related infrastructure.
- Scale AI across core processes to improve speed, accuracy, and decision quality.
- Shift the portfolio toward higher-margin lines less tied to consumer electronics cycles.
Where B2B growth will come from
LG expects its vehicle solutions unit to post its strongest annual results this year, powered by a healthy order backlog and demand for components used in software-defined, AI-enabled vehicles. The HVAC business is expanding to serve data centers that need advanced cooling for AI workloads. Smart factory solutions booked roughly 500 billion KRW (about $380 million) in orders last year-just two years after launch.
Higher-growth businesses-including subscriptions, the webOS platform, and direct-to-consumer online channels-accounted for about 45% of revenue in the second half of last year, up from 29% in 2021. Their share of operating profit rose to roughly 90% over the same period. That mix shift is the margin story to watch.
AI as operating system: the AX initiative
LG is deploying an end-to-end AI transformation across product development, manufacturing, supply chain, procurement, and sales. Internally called AX, the target is a 30% productivity lift within two to three years by automating routine decisions and compressing cycle times.
LGenie, LG's internal assistant, is evolving into an enterprise AI agent platform built on EXAONE and connected to external tools such as Microsoft Azure AI Services, ChatGPT, and Google's Gemini. The goal is to free employees for higher-value work while AI handles forecasting, coordination, and data-driven decision support.
Capital allocation: funding the shift
LG plans to increase future-growth investment by more than 40% this year. Funds will go to capital equipment, software, IT, patents, and strategic moves such as M&A. Priority areas include AI-enabled home technologies, smart factory solutions, AI data center cooling, and robotics. Part of the funding will come from the initial public offering of LG Electronics' India business.
What executive teams can learn
- Make B2B the stabilizer: anchor growth in contracted, backlog-heavy, or recurring lines to smooth consumer cycles.
- Treat AI as process infrastructure, not tools: link workflows end to end with clear productivity targets and ownership.
- Stand up an internal AI agent platform that blends secure first-party data with selected external models; start with forecasting, scheduling, and procurement.
- Point capex at bottlenecks created by AI demand-thermal management for data centers, factory automation, and integration software.
- Track the mix shift weekly: revenue share, backlog health, and operating profit concentration from higher-margin lines.
Signals to watch through 2026
- Vehicle solutions: bookings, backlog conversion, and content-per-vehicle in software-defined platforms.
- Data center HVAC: wins tied to AI clusters and measurable thermal efficiency gains.
- AX outcomes: cycle-time reductions, forecast accuracy, and progress toward the 30% productivity goal by function.
- IPO of the India business: timing, proceeds allocation, and M&A cadence.
If you're building an AI upskilling plan for leadership and operations, explore curated programs by role at Complete AI Training.
Your membership also unlocks:
