LG Corp. (003550.KS) has signed an artificial intelligence alliance with Microsoft, accelerating its shift toward becoming an AI infrastructure company. The "One LG" strategy of Group Chairman Koo Kwang-mo, which binds together capabilities built up separately by affiliates in home appliances, batteries, telecommunications and information technology services, is producing tangible results as it links up with a global tech giant in joint business. The "relentless execution" Koo has emphasized is becoming a driver for creating new business opportunities beyond group-wide AI transformation, or AX.
LG said on the 22nd that Koo held a top management meeting at Microsoft's headquarters in Redmond, Washington, on the 21st, attended by Microsoft Chief Executive Satya Nadella, and signed a strategic partnership for wide-ranging cooperation across the AI industry.
Core executives turned out in force for the signing, including LG Corp. Vice Chairman and Chief Operating Officer Kwon Bong-seok, LG Electronics (066570.KS) CEO Ryu Jae-cheol, LG Uplus (032640.KS) CEO Hong Beom-shik, LG CNS CEO Hyun Shin-kyun and LG Science Park President Jung Soo-heon.
In December last year, the LG group held an AI data center tech show with Microsoft at the U.S. company's headquarters, with executives from LG Electronics, LG Energy Solution (373220.KS), LG CNS and LG Uplus taking part, and the two sides discussed ways to cooperate strategically. Working-level talks that continued for months afterward culminated in a group-level strategic alliance through the meeting between Koo and Nadella.
At the heart of the alliance is combining LG's cooling solutions, networks and batteries — its "One LG" capabilities — into a single package supplied to Microsoft's global AI infrastructure.
Demand for AI data centers is rising quickly as agentic AI services that take over key human tasks expand worldwide. For AI data centers, which perform astronomical volumes of computation using vast numbers of high-performance graphics processing units and high-bandwidth memory, competitiveness hinges on power efficiency, cooling technology and operating know-how. Koo and Nadella judged that the synergy between the two companies is substantial in AI data centers and agreed to discuss specific forms of cooperation.
LG will take part in Microsoft's global data center expansion by bundling LG Electronics' high-capacity cooling technology, LG Energy Solution's battery and power solutions, LG CNS's capabilities in data center design, construction and operation, and LG Uplus's network technology into a single package.
LG plans first to pursue supplying high-capacity cooling solutions to AI data centers being built at Microsoft's strategic locations around the world. Over the medium to long term, it will widen the scope of cooperation to prefab data centers, in which major equipment is manufactured in advance at a plant and assembled on site. With shorter construction times emerging as a key competitive edge in the global AI data center market, LG aims to use the partnership with Microsoft as a springboard to move beyond being a mere equipment supplier and become an integrated AI infrastructure partner.
LG will also use Microsoft's platforms to speed up its group-wide AX. The company will adopt AI and cloud platforms including Microsoft's "365 E7: Frontier Suite," which comes with Copilot, for office workers across the group as it pushes to become an "AI native" company. Rather than simply distributing generative AI tools, LG plans to redesign its security, cost and operating systems to redefine how work is actually done with AI.
In physical AI, the two companies will use Microsoft's high-performance cloud infrastructure to speed up the development and training of manufacturing, logistics and mobility models. They agreed to build a "data flywheel" that feeds data generated on factory floors back into AI model training, creating a structure in which field data and AI models continuously reinforce each other.
The two sides will also work together to raise manufacturing competitiveness alongside the competitiveness of products, services and infrastructure businesses using AI. To that end, LG's physical AI and Microsoft's cloud capabilities will mesh in earnest on the factory floor. LG plans to accelerate the training of manufacturing, logistics and mobility AI models using Microsoft's high-performance cloud infrastructure.
Industry watchers say LG's AX drive, led by Koo, is evolving beyond overhauling the company's fundamentals into a stage of creating new businesses on the back of AI. Taking into account the strategic cooperation Koo struck with Nvidia CEO Jensen Huang in August, analysts say LG is securing new growth engines in AI infrastructure centered on cooling solutions and physical AI.
"LG's capabilities in cooling, batteries, telecommunications and IT operations are assets that, in the AI era, can be bundled into a single infrastructure package rather than standing as separate businesses," an industry official said. "As the One LG strategy combines with AX, it is having the effect of recombining existing businesses to fit the AI industry."
