LG Electronics is expanding support for the establishment of “smart factories” to strengthen the manufacturing competitiveness of its partner companies and is significantly increasing financial support for facility investment. This move is based on the judgment that, amid growing supply chain uncertainty, productivity improvements at partner firms are directly linked to the manufacturing capabilities of large corporations.

Since 2019, LG Electronics has been operating a “shared growth-type smart factory support program” under which it dispatches production technology experts to inspect the entire production process, including machining, assembly, packaging, and logistics, and supports productivity improvements through automation and other measures. More than 250 partner companies have achieved process innovation with LG Electronics’ support. In February, the company also held a regular general meeting with 83 partner firms to discuss plans for mutual growth.

LG Electronics has secured a broad range of smart factory-related technologies essential for building automated processes, including artificial intelligence (AI), big data, and the Internet of Things (IoT). Its Changwon Smart Park and Tennessee plants have been recognized for their smart factory competitiveness and were selected as “Lighthouse Factories” by the World Economic Forum (WEF).

LG Electronics is actively supporting its partners so that they can directly experience LG Electronics’ advanced processes, benchmark productivity innovation know-how among domestic and overseas partners, and thereby raise and standardize their manufacturing competitiveness. In March, a delegation of partner company representatives visited the Pune plant in India to benchmark advanced facilities, and the company plans to expand exchanges to major overseas hubs such as China and Vietnam to further raise and standardize partners’ manufacturing capabilities.

Financial support has also been strengthened for small and medium-sized partner firms that face difficulties in raising capital. From this year, LG Electronics has expanded the scale of its interest-free funding for partners’ new and automated facility construction by 50%, from KRW 40 billion to KRW 60 billion per year. In addition, through a KRW 300 billion shared growth cooperation fund, the company is helping partners obtain low-interest loans, and it is operating a shared growth payment system to support early cash settlement of supply payments.

Technology protection and export support are also being promoted in parallel. Since 2013, LG Electronics has supported more than 2,000 cases of “technology escrow,” under which technologies developed by partner companies are deposited with government agencies, thereby protecting intellectual property rights. The company also works with the Export-Import Bank of Korea to support overseas expansion with preferential interest rates.

Such close support has produced tangible results. A recent air conditioner parts supplier that completed its digital transformation (DX) doubled its productivity and reduced its defect rate by 75%. A refrigerator parts supplier introduced AI vision inspection, cutting inspection time by 75% and reducing painting defects by 70%.

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