Koo Kwang-mo, CEO of LG Corp., visited an energy storage system (ESS) business site in North America to review the local strategy and urged employees to strengthen competitiveness. This move is seen as bolstering the ESS business, which has become a core growth engine for the group alongside the expansion of the artificial intelligence (AI) data center market.

According to LG, on the 30th of last month (local time), Koo visited the Massachusetts business site of Vertech, LG Energy Solution’s ESS system integration (SI) specialist subsidiary in the United States. Koo told employees there, “A business foundation must be secured that will not be shaken by any external environment,” adding, “In particular, beyond ESS battery hardware, capabilities in integrated solutions must be enhanced to establish an overwhelming, market-leading position.”

An LG official explained, “In a phase where future battery demand for AI data centers and physical AI (AI applied to physical entities such as robots) is growing rapidly, capabilities in integrated solutions that combine hardware and software are crucial.”

Koo is also reported to have stressed the need for “selection and concentration” in technology development and investment so that LG can secure a competitive edge in ESS going forward. This reflects the need for careful consideration of how to generate sustainable results in an ESS market where competition is intensifying.

Vertech, which Koo visited on this trip, is regarded as a prime example of LG’s “selection and concentration” strategy in its battery business. In February 2022, LG acquired ESS software company Vertech to strengthen its ESS capabilities. Vertech possesses system integration technology that encompasses ESS design, installation, maintenance, and other aspects of operational management. Since the acquisition, LG has been able to provide customers with a one-stop offering that ranges from ESS battery products manufactured by LG Energy Solution to ESS installation and after-sales management. Currently, LG Energy Solution is the only company in the world that produces and supplies ESS batteries in North America.

The ESS market is growing rapidly in tandem with the spread of AI data centers and renewable energy. ESS are devices that store electricity and supply it when needed. Because they can complement renewable energy sources such as solar and wind power, whose output is irregular depending on the weather, they are drawing attention in the AI sector as a stable power source for data centers. According to market research firm Mordor Intelligence, the global ESS market is projected to increase 2.5 times from USD 76.7 billion last year to USD 198.9 billion in 2031.

After visiting Vertech in the United States, Koo traveled to Brazil, where he visited LG Electronics’ Manaus manufacturing subsidiary in Amazonas State in the northwest and local retail stores to discuss strategy for the Latin American market. Following his visits to India in February and Indonesia in June last year, his trip to Brazil accelerates LG’s push into the “Global South,” which has a combined population of some 2 billion people. Brazil is an economic powerhouse that accounts for 40% of Latin America’s total gross domestic product (GDP).

LG Electronics is building a new refrigerator plant in Paraná State in southern Brazil as a strategic base to strengthen its dominance in Latin America. The plant, aimed at meeting domestic demand in Brazil, will begin full-scale operations in July this year.

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