LG Group’s Automotive Electronics Order Backlog Surpasses KRW100tn

Although Apple has delayed the release of Apple Car and downsized its self-driving car project, LG Group’s order backlog in the automotive electronics business continues to increase.

Apple has reportedly delayed the release date of a self-driving car by one year to 2026. Initially, Apple had tried to mass-produce a fully autonomous, Level 5 vehicle without a steering wheel and pedals. But it came to the conclusion that the technology for such a car is beyond its capability and, therefore, significantly changed its development plan.

Despite the change in Apple’s car plan, the automotive electronics order backlog of LG Electronics, LG Innotek, and LG Display is expected to exceed 107 trillion won this year. An order backlog refers to the amount of orders that have yet to be fulfilled. Depending on contract conditions and delivery time, it leads to sales with intervals. In this regard, an order backlog is considered a key indicator of a company’s performance.

LG Electronics is aggressively expanding its automotive electronics business through three entities — the company’s VS Division and two affiliates, LG Magna e-Powertrain and ZKW. In the second quarter of 2022, LG Electronics’ automotive electronics business returned to the black for the first time in nine years.

As of the end of this year, the company’s order backlog is expected to reach 84 trillion won. In the first half of this year, its order backlog was projected to hit 65 trillion won in 2022, but the figure swelled by 29.2 percent in the second half of this year. In 2023, the VS Division’s operating profit is also expected to soar 83 percent on year to 331.7 billion won.

LG Innotek mainly produces vehicle communication parts and vehicle motors. The company’s sales in the fourth quarter of 2022 are expected to increase by 27.6 percent on year to 7,301.9 billion, and its Q4 operating profit is estimated at 620.4 billion won, up 44.4 percent from a year ago. Its order backlog is expected to hit 13 trillion won.

Although LG Display continues to lose money due to a slump in the display market, its automotive electronics business is faring well, and its related order backlog is approaching 10 trillion won. Recently, it is preparing for a full-fledged boom in the future car market by developing invisible car speakers for automobiles.