LG Electronics Targets AI Semiconductor Growth with Cooling Innovations
LG Electronics enhances its position in AI semiconductors with cooling innovations and hybrid bonding technologies.
Key Points
- • LG is innovating in hybrid bonding technology for HBM chips, targeting mass production by 2028.
- • The company's liquid cooling solutions are in talks with Nvidia and Microsoft, aiming to triple cooling sales by 2025.
- • Trade tensions and rising LCD prices have adversely affected LG's operating margins.
- • LG's strategy includes capitalizing on the expected $12 billion growth in the global data center cooling market by 2030.
LG Electronics is intensifying its focus on the AI semiconductor market by advancing its cooling technologies and hybrid bonding strategies. The company is developing innovative hybrid bonders for high-bandwidth memory (HBM) chips with plans for mass production by 2028. This technology is crucial for stacking memory chips and positioning LG as a supplier to major manufacturers like Samsung and SK Hynix, although it faces stiff competition from established players such as Besi and Applied Materials.
In parallel, LG is actively engaging with tech giants Nvidia and Microsoft to commercialize its advanced liquid cooling systems, particularly its Coolant Distribution Unit (CDU). The company aims to triple its cooling sales by 2025 and forecasts revenue of 1 trillion won (approximately $750 million) from cooling products within two years, aligning with the projected growth of the global data center cooling market, which is estimated to reach $12 billion by 2030 due to rising AI adoption.
However, LG is grappling with rising operational challenges. Trade tensions have inflated production costs amidst U.S. tariffs, and the sharp rise in LCD panel prices has negatively impacted its operating margins, leading to a 47% decline in Q2 2025 profits. Current operating margins are around 2.8%, significantly lower than Samsung's 10.2%.
Analysts predict a potential rebound to 3-4% margins by 2026 as logistics improve and synergies from new acquisitions materialize. LG's strategic pivot towards B2B operations in HVAC and semiconductor equipment reflects a desire to mitigate the volatility of the consumer electronics sector. While the journey ahead is fraught with uncertainties, the company's shift towards becoming an AI infrastructure player offers a long-term growth narrative, appealing to patient investors despite associated risks.