South Korea’s heat pump market is officially opening up, driven by the government’s heating electrification policy. On the initial testing ground of Jeju Island, LG Electronics (066570.KS), Samsung Electronics (005930.KS), and Kyungdong Navien (009450.KS) are locked in an intense three-way battle for early market leadership. With the South Korean government targeting the deployment of 3.5 million heat pumps nationwide by 2035, the performance on Jeju is expected to be a watershed moment for competition in the domestic market as the rollout expands across the country.
A heat pump is an eco-friendly heating and cooling technology that utilizes thermal energy from the air to supply heating and hot water. It is more energy-efficient and produces fewer carbon emissions than traditional fossil fuel-based boilers, leading to rapid adoption, particularly in Europe. The global heat pump market, valued at approximately $80 billion last year, is projected to grow to over $100 billion by 2030.
The push for wider adoption is also gaining momentum in South Korea. Through its “Heat Pump in Daily Life” subsidy program this year, the Jeju provincial government supplied air-source heat pumps to 1,042 households in the first half of the year. The program links the systems with solar power installations to maximize energy cost savings.
LG Electronics is making the most aggressive moves. The company received the highest score in this year’s evaluation for the Jeju heat pump subsidy program, securing its position as the top contractor. It took charge of installing units in about 450 of the 1,042 households in the first half, gaining an early advantage. Leveraging its business experience accumulated in overseas markets like Europe, LG Electronics is expanding its product lineup from residential to commercial and industrial applications. It plans to broaden its scope into the energy management solution business by utilizing its smart home platform, which connects to home appliances like refrigerators and washing machines.
Samsung Electronics is also accelerating its push into the Jeju market. The company officially entered the heating electrification market in April with the launch of its air-source “EHS Heat Pump Boiler.” This product uses air heat and electricity to provide heating and hot water, featuring high heat production efficiency relative to power input. Samsung began installing its EHS heat pump boilers in the Jeju region in June, expanding its participation in the subsidy program. Its strategy for differentiation involves linking SmartThings-based energy management features with the Samsung home appliance ecosystem.
Boiler specialist Kyungdong Navien is also strengthening its heat pump business. Based on the installation and service network built through its existing boiler business, the company plans to make Jeju a hub for South Korea’s transition to heat pumps. Kyungdong Navien is pushing to transform from a gas boiler-centric business into an eco-friendly heating and cooling solutions company. Industry observers believe that the ability to capitalize on boiler replacement demand and its existing sales network will be a key strength in the early stages of competition. On May 28, Kyungdong Navien opened the “Navien Heating Electrification Center” on Jeju, announcing it is preparing to handle about 30% of the government’s deployment target. In July, it began mass production of its new air-source boiler, the ‘PEM550,’ at its Pyeongtaek plant, establishing a system to domestically produce the entire heat pump process, including the heat storage tank, controller, and outdoor unit.
CategoryLG ElectronicsSamsung ElectronicsKyungdong NavienJeju Subsidy Program PerformanceRanked 1st in 2026 evaluation; responsible for 450 of 1,042 householdsBegan Jeju installations in JuneOperating ‘Navien Heating Electrification Center’; preparing to handle ~30% of gov’t targetRepresentative ProductLG Therma V integrated heat pumpEHS Heat Pump BoilerAir-source boiler PEM550 (mass production at Pyeongtaek plant from July)Key Efficiency MetricHeat energy 4-5x power input, 40-60% cost reductionSmartThings-linked energy managementSCOP up to 5.2, R32 refrigerant (GWP 68% lower)Core StrategyOverseas business experience + smart home energy management expansionSmartThings and home appliance ecosystem linkageExisting boiler sales network + parts localization (targeting standard model by 2028)
Note: LG Electronics figures based on EBN report (2026-08-02); Kyungdong Navien figures based on Herald Economy (2026-07-24) and Bridge Economy (2026-05-31) reports.
The competition surrounding heat pumps is expected to evolve beyond simple product sales into a battle over energy management platforms. “With the government’s subsidy program as a catalyst, the domestic heat pump market is highly likely to move beyond its initial stage and enter a full-fledged growth phase,” an industry official said. “The installation cases secured on Jeju will become a critical competitive edge in the future nationwide expansion process.”
Meanwhile, the thermal management market for data centers is also experiencing rapid growth in the AI era. Investment in AI data center facilities is estimated to reach $1 trillion this year, up from $750 billion last year. According to market research firm Fortune Business Insights, the global thermal management systems market was valued at $81.97 billion in 2025 and is projected to grow at a compound annual growth rate of 8.5%, expanding to $169.4 billion by 2034.
Note: Fortune Business Insights estimates ($81.97 billion in 2025, $88.18 billion in 2026, $169.4 billion in 2034, CAGR of 8.5% from 2026-2034). The data center segment is expected to show the highest growth rate among all application areas.
Samsung Electronics and SK Hynix (000660.KS) are making heat control at the semiconductor design stage a core competitive advantage. Samsung recently unveiled its next-generation 3D memory technology, ‘zHBM.’ This approach vertically stacks memory directly on top of an AI accelerator, which is expected to help improve heat issues by reducing thermal resistance by half compared to existing methods. SK Hynix also showcased its next-generation memory technology, HBF (High Bandwidth Flash), positioning thermal management technology as a key feature.
CategorySamsung Electronics zHBMSK Hynix/SanDisk HBFAnnouncement TimingFMS 2026, Aug 5 (local time)FMS 2026, Aug 4 (local time)StructureMemory vertically stacked on top of AI acceleratorNew NAND-based memory tier between HBM and SSDPerformanceUp to 8x performance vs. HBM5, up to 3x power efficiencyUp to 512GB per device, 0.4-3.0TB/s bandwidth (3 tiers)Heat ManagementThermal resistance reduced by more than halfCPU/GPU connection via UCIe chiplet interconnectStandardizationSamsung standalone mock-up unveiledOCP open standard, Google/Tenstorrent consortium participation
Note: Both technologies were unveiled at FMS (Future of Memory and Storage) 2026, the world’s largest memory conference, held in Santa Clara, USA. (Source: Financial News, 2026-08-04 & 08-05)
LG Electronics is cultivating AI data center cooling solutions as a future growth engine. Building on its existing commercial HVAC business, it is advancing chillers and cooling water systems to target the global data center market. “The company secured orders related to AI data center cooling solutions worth ₩600 billion in the first half of this year,” said Park Kang-ho, an analyst at Daishin Securities. “If the additional multi-trillion-won orders suggested by LG Electronics proceed, the profitability of its Eco Solution (ES) division is expected to expand in 2027.”
The oil refining industry has also jumped into the next-generation immersion cooling market. Immersion cooling, a method that removes heat by directly submerging servers in a special insulating coolant, is gaining attention as a next-generation technology due to its higher efficiency compared to traditional air cooling. HD Hyundai Oilbank is demonstrating its ‘Xtier E-Cooling Fluid’ in cooperation with entities including the Seoul National University AI data center. The ‘e-Cooling Solution’ immersion cooling fluid developed by S-Oil (010950.KS) is applicable to high-heat environments, including data centers, ESS, and electric vehicle batteries. S-Oil plans to conduct verification tests with partners like the Sungkyunkwan University Supercomputing Center.