LG Electronics is accelerating the development of its commercial robotics capabilities, particularly in delivery and logistics, as part of its strategic investment in future new businesses.
LG has invested $60 million (approximately 80 billion KRW) in Bear Robotics, a California-based AI-driven autonomous service robot startup, acquiring a stake through a new stock purchase agreement.
This equity investment is not aimed at short-term profits but is a strategic investment that enhances LG’s business portfolio. Upon completion of the share transaction, LG Electronics will become the largest shareholder of Bear Robotics.
Founded in 2017, Bear Robotics is led by CEO John Ha, a former Google software engineer and tech lead. They provide AI-based autonomous indoor delivery robots not only in South Korea but also in the United States and Japan.
The company boasts a significant number of engineers from major tech firms, including Google, alongside a co-founder serving as Chief Technology Officer (CTO). Their open platform-based robotics development capabilities are recognized as top-tier globally. They excel particularly in platforming commercial robotics software, swarm control technologies that manage multiple robots, and cloud-based monitoring solutions, drawing attention within the industry.
Regarding the investment, CEO Cho Joo-wan stated at the CES 2024 press conference held earlier this year in Las Vegas, “LG’s commercial robotics business is mainly focused on service areas such as delivery and logistics, and we are carefully observing our development direction, remaining open to the possibilities of equity investments or mergers and acquisitions (M&A).”
LG Electronics believes that the paradigm of commercial robots will shift to software-defined robots (SDR), emphasizing AI-driven software. Similar to how mobility trends transitioned from hardware-centric to software-centric, enabling a proliferation of service robots in various spaces will necessitate securing scalability for service robots based on an open-structured software platform, making standardization of AI-based autonomous robot platforms increasingly pivotal.
In this regard, LG expects this strategic investment to swiftly enhance its capabilities in the robotics business, which it is cultivating as a future new business.
Over years of engaging in the robotics business, LG has accumulated know-how in robotic solutions across diverse commercial spaces, including airports, hotels, restaurants, hospitals, stores, museums, smart logistics warehouses, and golf courses. LG Future Park in Gumi, North Gyeongsang Province, has production facilities for commercial robots and boasts world-class capabilities in quality control, supply chain, and services.
By integrating Bear Robotics’ global R&D infrastructure and software platform capabilities, LG can lead the standardization of robotic platforms and significantly lower market entry costs, resulting in maximized business efficiency and synergy. CEO John Ha of Bear Robotics previously stated, “Just like Android initiated the smartphone era, a standardized open platform is necessary to invigorate the robotics market.”
In recent years, LG has made bold decisions to terminate limited businesses such as mobile phones and solar energy, reallocating resources towards high-growth future areas. This equity investment also aims to accelerate the early strategic deployment and cultivation of its commercial robotics business.
LG has steadfastly nurtured robotics as a pillar of its future business. Since initiating the indoor guide robot service at Incheon International Airport in 2017, it has introduced optimized solutions for various commercial spaces, including delivery and disinfection. From last year onward, it has aggressively targeted overseas markets, including the U.S., Japan, and Southeast Asian countries.
The service robot market is expected to experience rapid growth as related technologies such as AI and communications evolve quickly, and demographic changes such as declining birth rates and aging populations continue. The global service robot market is projected to grow from $36.2 billion (approximately 48 trillion KRW) in 2021 to $103.3 billion (approximately 137 trillion KRW) by 2026.
Earlier, LG announced its vision to transform into a smart life solutions company connecting and expanding various customer spaces and experiences, including homes, mobility, commercial spaces, and virtual environments. Through this, LG aims to achieve sales of 100 trillion KRW and a ‘7·7·7’ (CAGR/operating profit margin of 7%, corporate value (EV/EBITDA multiple) of 7 times) by 2030.
Lee Sam-soo, CSO of LG Electronics, emphasized, “This equity investment is expected to play a significant role in securing the business’s ‘winning competitiveness’ as the service robot market enters its growth phase. In the mid- to long-term perspective, we will explore various opportunities by integrating differentiated technological domains such as embodied AI and advanced robotics manipulation, positioning the robot business as a future growth engine.”
Lee Sang-jin daedusj@autodiary.kr