LG Electronics (066570.KS) is making a full-scale push into the modular (prefabricated) housing market, a new business that can simultaneously grow its core operations in home appliances, artificial intelligence (AI) and heating, ventilation and air conditioning (HVAC). LG Electronics plans to sign a series of global partnerships and integrate the supply of appliances and residential solutions for modular homes, a segment growing rapidly overseas to a scale of 200 trillion won, in a bid to improve its earnings. Samsung Electronics (005930.KS) recently announced its own entry into the market, signaling fierce competition for leadership between the two major appliance makers.
According to industry sources Tuesday, LG Electronics last month signed strategic partnerships in succession with Swedish modular housing firm SIBS and Australian firm Greater Homes for cooperation in the modular housing business. LG Electronics plans to supply appliances and residential solutions such as AI, energy and HVAC needed for the large-scale modular homes that the two companies will build in major countries, starting with Australia. This marks the first time LG Electronics has signed a cooperation deal to supply its products for overseas modular homes.
Modular homes are houses that can be built quickly within a few months by manufacturing more than 70% of the main structure in advance at a factory and transporting it to the site for assembly. Construction costs can also be cut by up to half. They are drawing attention for various uses including ordinary homes, second houses (vacation homes), campsites and corporate training centers. According to market research firm MarketsandMarkets, the global modular housing market is expected to reach $140.8 billion (about 216 trillion won) by 2029. For LG Electronics, it is an opportunity not only to significantly boost revenue by quickly supplying major appliances and solutions at once, but also to showcase a smart home ecosystem in which appliances and solutions are closely linked to overseas customers.
SIBS has two factories in Malaysia and the capacity to build 6,000 modular housing units per year. Following its existing presence in Europe, it began entering Australia from late last year, winning orders for a total of around 300 housing and hotel units. Its goal is to supply more than 2,000 units per year in Australia. Australia has set a target of supplying 1.2 million homes over the five years to 2029, but a shortfall of 375,000 units is actually expected, making it a market with particularly high anticipated demand for modular homes. LG Electronics will take charge of supplying AI appliances and HVAC solutions for these homes, and plans to expand the scope of cooperation to other regions thereafter.
Greater Homes is also focusing on capturing domestic modular housing demand, operating a 7,000-square-meter factory in Tullamarine, Victoria, Australia. This year, it is conducting a pilot project to install LG Electronics' Home Energy Management System (HEMS) in its modular homes, and based on this, the two companies will pursue expanded cooperation. HEMS is a technology that can cut electricity bills by about 10% on average by optimizing the energy use of appliances to match users' usage patterns through the "LG ThinQ Home Solution."
LG Electronics entered the modular housing market in 2024 with the launch of "LG Smart Cottage," a product that directly builds homes as well as supplies appliances and solutions. After supplying the product to some corporate customers, it is reportedly set to further strengthen its business expertise through this global partnership.
The reason LG Electronics is investing heavily in such new businesses is to overcome the slowing growth of its appliance business. The Home Solution (HS) division, which handles general appliances, is expected to post annual operating profit this year similar to or slightly lower than last year's (1.2793 trillion won), due to the fallout from the Middle East war and chipflation (a surge in semiconductor prices). In its first-quarter earnings announcement this year, LG Electronics said it would "maintain growth by reinforcing its product lineup, expanding its business-to-business (B2B) operations and targeting the Global South market." Along with modular homes, the company is also putting effort into the new business of built-in (customized) appliances, a high-margin appliance solution, in North America and Europe.
Samsung Electronics also threw down the gauntlet to LG Electronics on Thursday with the launch of its modular housing product "Samsung AI Modular Home." Joining hands with modular housing specialist Gonggan Jejakso, it will integrate and supply about 20 types of appliances and Internet of Things (IoT) devices, including air conditioners, heat pump boilers, refrigerators and TVs. Earlier, it had also unveiled a modular housing solution for the global B2B market together with Samsung C&T.
