LG Corp. (003550) Chairman Koo Kwang-mo and Microsoft Chief Executive Satya Nadella met in the United States and agreed to form an alliance in artificial intelligence. Under the plan, LG will mobilize the group's full AI capabilities — from cooling, power and IT infrastructure to physical AI on factory floors and workplace innovation for employees — while Microsoft provides its global data center and cloud infrastructure.
LG said on the 22nd that Koo and Nadella attended a top management meeting at Microsoft's headquarters in Redmond, Washington, on the 21st, where the two sides agreed to expand their strategic partnership.
The meeting drew a large group of executives from LG's main affiliates, including LG Corp. Chief Operating Officer Kwon Bong-seok, LG Electronics (066570) CEO Ryu Jae-cheol, LG Uplus (032640) CEO Hong Beom-shik, LG CNS CEO Hyun Shin-kyoon and LG Science Park President Jung Soo-heon. Koo's visit to Microsoft headquarters with the group's key AI and data center executives is seen as a move to expand AI business with Microsoft through a "One LG" approach that bundles the capabilities of individual affiliates.
The first area the two sides will pursue commercially is AI data centers. As Microsoft expands AI data centers around the world, the two companies agreed to jointly explore business opportunities for LG to supply large-scale cooling, power and IT infrastructure solutions. In the near term, they will work out the possibility of supplying large-scale cooling solutions for Microsoft's key strategic data centers. Over the medium to long term, they plan to widen cooperation to "prefab" data centers, in which major equipment and structures are produced in factories in advance and assembled quickly on site.
AI data centers consume far more power and generate far more heat than conventional facilities because they are packed with high-performance graphics processing units. That has made cooling technology that dissipates server heat and stable power supply central to a data center's competitiveness. LG plans to target the global AI infrastructure market by combining LG Electronics' heating, ventilation and air conditioning technology with LG CNS' capabilities in building and operating data centers.
Koo and Nadella also agreed to accelerate AI transformation inside LG. The company plans to adopt Microsoft's AI and cloud platforms, including the generative AI service Copilot, for office workers worldwide. Rather than simply installing AI software, LG intends to redesign security, costs and operating systems around AI to change the way work itself is done.
Physical AI, which applies AI to actual industrial settings such as manufacturing, logistics and mobility, is another core area of cooperation. LG plans to build a structure in which data accumulated on factory floors is used for training on Microsoft's high-performance cloud infrastructure and then applied back to production sites.
Through this, the two companies aim to establish a "data flywheel," in which AI models improve as more field data accumulates and the improved AI in turn lifts productivity and data quality at the sites.
Talks between LG and Microsoft gained momentum at a technology event held at Microsoft headquarters in December last year. Working-level and management discussions continued for several months, and the meeting between Koo and Nadella widened the scope of cooperation to AI infrastructure, workplace innovation and physical AI.
LG's strategy is to use the partnership to bundle group businesses spanning home appliances, air conditioning, IT services and telecommunications around AI, and to expand its business-to-business market.
