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Photo = Yonhap news |
[Alpha Biz= Kim Minyoung] LG Group is set to officially enter the defense components market, leveraging the success of LG Electronics' automotive electronics (vehicle component) business.
According to an exclusive report from AlphaBiz on Monday, LG Group has decided to expand beyond automotive electronics and into the defense components sector.
An industry insider familiar with LG Group's internal affairs told AlphaBiz, "LG Electronics' vehicle component business has been experiencing rapid revenue growth, and the company has the capacity for development and production. This has led to the decision to actively enter the defense components market."
In the second quarter of last year, LG Electronics' VS (Vehicle Solutions) business unit posted a record-high revenue of 2.6919 trillion KRW and an operating profit of 81.7 billion KRW.
This revenue marked the highest quarterly figure for the division, while the operating profit represented a turnaround from previous losses, achieving the highest Q2 performance to date.
Alongside its home appliance business, the VS division played a crucial role in LG Electronics' strong overall performance last year, earning its employees the highest 510% performance-based bonuses within the company.
The insider further explained, "With the global expansion of Korea's defense industry and the increasing demand from major European and other advanced defense companies for stable supply chains, LG Group is looking to apply its successful vehicle solutions expertise to the defense components sector."
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The defense industry has been facing significant supply chain disruptions, particularly in component procurement, due to the COVID-19 pandemic.
For instance, Korea Aerospace Industries (KAI) has reportedly encountered difficulties in securing parts for its KT-1 trainer aircraft and KA-50 light attack aircraft, which has impacted its ability to fulfill international orders.
Woo Ki-Hoon, former Vice President of KOTRA and a senior partner at Mulepha, commented, "Once a component supply chain collapses, it takes a long time to rebuild. If a global player like LG enters this market, it could have a competitive advantage in securing market share over other suppliers. This development is worth keeping an eye on."
Alphabiz 김민영 기자(kimmy@alphabiz.co.kr)
