Global manufacturing is entering a period of fundamental change. Geopolitical uncertainty continues to disrupt supply chains, while AI and data technologies are rapidly reshaping the production floor. At the same time, new requirements such as carbon regulations are redefining the standards of manufacturing competitiveness.

Today, the challenge is no longer simply about improving efficiency. It is about how quickly manufacturers can respond to change, optimize operations on their own and build resilient systems that continue to perform under pressure. That is why many global companies are now building intelligent manufacturing systems across production and logistics, and those that can apply such systems faster than others will be best positioned to secure manufacturing competitiveness.

In this interview, Song Si-yong, head of the Smart Factory Solution Center at LG Electronics, explains what determines success in manufacturing innovation and how we are approaching the future of smart factory solutions.

Q1. Many people may not realize that LG Electronics (LG) provides smart factory solutions. How did LG come to build capabilities in this field, and what differentiates the company today?

The success of a smart factory solution ultimately depends on one question: Who has actually designed, built and operated real factories?

Experience and data validated in real manufacturing environments are critical. They do more than demonstrate technical capability. They help customers stabilize operations more quickly and improve the chances of successfully building and running advanced factories.

We are a global manufacturer that has directly designed, built and operated more than 60 factories around the world over the past 70 years. Leveraging AI and robotics, we have led the implementation of smart factory systems not only for ourselves, but also for other LG Group affiliates. Through this, we have accumulated practical experience across a wide range of manufacturing environments.

In the process, we have built vertical expertise across industries including secondary batteries, displays, automotive components and logistics. That field experience has been combined with more than 770 terabytes of manufacturing data, evolving into what we call LG's manufacturing intelligence. Since AI can only make sound decisions in a factory when it is trained on high-quality data, data is often described as the key to smart factory success.

In addition, through our end-to-end offering, we enable integrated change management. Our solutions cover the entire manufacturing value chain — from production and logistics to quality — and support the full factory lifecycle, from diagnosis and consulting to design, implementation, ramp-up and renewal, all in a turnkey format.

Our integrated solutions and accumulated experience across industries and regions give us a strong foundation for applying solutions reliably in very different manufacturing environments. As a result, orders are now increasing rapidly not only from LG Group affiliates, but also from global external customers.

Q2. What results have you seen so far? How is the market responding?

The strength of our solutions has already been proven globally.

At LG Smart Park in Changwon, productivity improved by approximately 17%, while automation levels increased to around 45%. At our plant in Tennessee, automation reached 60%, defect rates fell by 61%, and test cycle time was reduced by 22%. Both facilities were selected as Lighthouse Factories.

Based on this level of validation within LG and across LG Group affiliates, we began expanding the business more actively to external customers in 2024. Since then, we have continued to demonstrate the competitiveness of our solutions in domestic and international markets. Discussions with customers are growing across multiple industries — including automotive, secondary batteries, semiconductors, heavy industry and logistics — rather than being limited to one specific sector or operating environment, and increasingly leading to tangible collaboration.

As a result, just two years after the business started, we recorded KRW 500 billion in annual orders in 2025. Going forward, our goal is not simply to deliver short-term project results, but to establish ourselves as a long-term partner that helps strengthen our customers' manufacturing competitiveness.

Q3. What is LG's mid- to long-term strategy for the smart factory solutions business?

We are pursuing a strategy that focuses both on global expansion and expanding the coverage of our solutions.

First, we are broadening our customer base by expanding across industries and regions, such as North America and Southeast Asia, based on existing references. At the same time, we are deepening our offerings by applying advanced technologies such as physical AI, while also expanding the scope of our solutions through collaboration with global partners.

We are also continuing to strengthen our risk-minimization framework across every phase — before, during and after deployment — so that, as a solution engineering partner, we can help customers adopt smart factory solutions more reliably.

Based on this strategy, we aim to grow this business into a billion-dollar global business in 2030.

Q4. What differentiates LG's physical AI?

What sets our physical AI apart is that it is grounded in real manufacturing environments. It is built on manufacturing data accumulated across our global production sites, along with years of hands-on experience in production automation. On that foundation, we are gradually addressing labor-intensive processes that have been difficult to address through conventional automation by applying physical AI-based unmanned solutions.

We are now expanding these capabilities beyond our own manufacturing sites to LG Smart Factory customers around the world, with applications across high-growth industries such as semiconductors, automotive, heavy industry and pharmaceuticals.

Q5. What does LG mean by "solution engineering partner"?

We do not aim simply to provide individual solutions. We pursue solution engineering — designing answers to the unstructured problems our customers face.

That is because the essence of manufacturing innovation lies in solving problems beyond the technology itself.

Drawing on decades of manufacturing experience, we define the root of the problem and apply technologies validated in our Lighthouse Factories to deliver tailored solutions for each customer.

Through this approach, we have developed practical answers across a wide range of environments — from ultra-precision advanced industries to large-scale heavy industries — where standardized approaches alone are often not enough. Going forward, we intend to continue building our position as a trusted partner.

Q6. What does LG believe the "factory of the future" will look like?

We believe the factory of the future will evolve into one that can think and act on its own through physical AI and manufacturing intelligence.

Built on large-scale manufacturing data, intelligent operating systems will enable people, robots and equipment to seamlessly share information and collaborate. This will allow factories to evolve into autonomous operations that are more flexible, agile and responsive to changes in their environment.

This transformation will not happen all at once. It will be built through the steady accumulation of innovation on the ground. At LG Electronics, we will continue to support our customers across the entire manufacturing lifecycle — combining proven production technologies and know-how gained through real manufacturing experience with practical, deployable physical AI solutions. In doing so, we aim to help make the factory of the future a practical reality.