South Korea’s LG Electronics invested a record ₩560 billion (approximately $404.6 million) in its home appliance business during the first half of this year. The strategy involves reinvesting profits earned from the strong-performing appliance business into expanding overseas production bases and upgrading domestic manufacturing processes. As competition in the global home appliance market intensifies amid aggressive low-cost strategies from Chinese manufacturers, the move is seen as an effort to convert current profitability into production competitiveness and maintain market leadership.

According to LG Electronics’ (066570.KS) half-year report released on the 24th, the HS Business Division, which oversees home appliances, recorded first-half investment of ₩560 billion. This represents an approximately 69% increase from ₩331.3 billion (approximately $239.4 million) during the same period last year. Given that the HS Business Division’s first-half investment had remained around ₩300 billion over the past five years, this year’s expansion is particularly notable.

The investment expansion is backed by strong performance in the home appliance business. The HS Business Division posted record half-year revenue of ₩14.02 trillion (approximately $10.1 billion) with an operating margin of 9.0%. LG Electronics is pursuing a two-track strategy: expanding premium product sales in developed markets such as North America and Europe, while targeting the mid-range “volume zone” product segment in emerging markets including India and Latin America.

The profitability gap with rival Samsung Electronics (005930.KS) in home appliance and TV businesses has also widened this year. While the business scopes do not align exactly, comparing LG Electronics’ HS, MS (Media Entertainment), and ES (Eco Solutions) business divisions with Samsung Electronics’ VD (Visual Display) and DA (Digital Appliances) divisions shows the operating profit gap grew from ₩990 billion in the first quarter to ₩1.15 trillion (approximately $831.6 million) in the second quarter. The cumulative first-half gap reached ₩2.14 trillion (approximately $1.5 billion).

In the second quarter, the two companies posted similar revenue figures but diverged sharply in profitability. LG Electronics’ combined HS, MS, and ES divisions recorded revenue of ₩14.92 trillion (approximately $10.8 billion) and operating profit of ₩1.14 trillion (approximately $824.4 million). In contrast, Samsung Electronics’ VD and DA divisions posted revenue of ₩14.5 trillion (approximately $10.5 billion) but recorded an operating loss of ₩10 billion (approximately $7.2 million). Samsung’s VD and DA divisions had posted ₩200 billion (approximately $144.5 million) in operating profit in the first quarter before swinging to a loss in the second quarter. While the differing business scopes limit direct comparison, the profitability divergence at similar revenue levels is striking.

Expanding Global South Production Bases and Upgrading the Changwon Mother Factory

LG Electronics is channeling investment capacity secured from its home appliance business into restructuring its global production system and strengthening manufacturing competitiveness. According to industry sources, a significant portion of first-half investment went toward new plant construction in Paraná, Brazil and Sri City, India, as well as advanced production process upgrades at the Changwon plant in South Gyeongsang Province. The direction is to increase local production capacity in high-growth emerging markets while advancing manufacturing technology in South Korea for application across global production bases.

This aligns with LG Electronics’ recent push into the “Global South.” In India, the company is building a new home appliance plant in Sri City, Andhra Pradesh, and in Brazil, it is establishing a production base in Paraná. The goal is to secure local production capacity in high-growth Indian and Latin American markets to respond quickly to demand while reducing logistics costs and tariff burdens. Distributing production bases also provides resilience against geopolitical variables and supply chain disruptions.

Alongside expanding overseas production bases, the company is strengthening the role of its domestic production facilities. The Changwon plant serves as LG Electronics’ core home appliance production base and functions as a “mother factory” that disseminates manufacturing technology and process expertise to overseas production subsidiaries. LG Electronics is advancing the Changwon plant’s production processes to develop manufacturing technologies and applying them to overseas production bases including India and Brazil.

Expanding Investment Scope into Materials, Components, and Robotics

Beyond enhancing production competitiveness in existing home appliances, the company is also allocating funds to new businesses. LG Electronics has built a glass powder-based functional materials production line with an annual capacity of 2,000 tons in Haiphong, Vietnam. The aim is to expand material technologies accumulated through home appliance manufacturing into a B2B materials business supplying external customers.

In the second half, the investment scope will broaden to include components and robotics. The company plans to execute production facility investments for the full-scale mass production of actuators, which it is developing as a next-generation core component, while continuing investment in the robot data factory under construction in Yangjae, Seoul.

The robot data factory is a facility for acquiring and processing data needed for robot learning. LG Electronics is leveraging motor, sensor, and control technologies accumulated in its home appliance business for robotics. The strategy is to expand technologies and capital secured from the home appliance business into adjacent areas such as materials, components, and physical AI to establish new revenue streams.

An LG Electronics official said, “We are channeling the achievements secured from our home appliance business into investments for strengthening future competitiveness,” adding, “We plan to continue investing to upgrade global production bases while securing competitiveness in new businesses.”

CategoryLG Electronics HS·MS·ESSamsung Electronics VD·DAQ2 Revenue₩14.92 trillion₩14.5 trillionQ2 Operating Profit₩1.14 trillion-₩10 billionQ1 Operating Profit₩1 trillion₩200 billionH1 Cumulative Operating Profit Gap₩2.14 trillion-

Note: Business scopes differ partially, limiting direct comparison