LG Electronics is experiencing a surge in orders for its artificial intelligence data center (AIDC) cooling solutions, prompting the need to expand production capacity. With increased investments from global tech giants, the company is expected to achieve its goal of 1 trillion won in chiller sales, initially set for next year, ahead of schedule this year.
According to industry sources on October 22, LG's cumulative orders for cooling solutions are projected to reach around 3 trillion won by year-end. The company secured over 600 billion won in orders in the first half of the year, with additional large projects lined up for the second half.
On October 6, LG Electronics signed a long-term supply agreement (LTA) with North American data center infrastructure firm Air Control Concepts to supply high-efficiency chillers for AIDC, totaling 5 gigawatts (GW). The contract value is estimated between 2 trillion and 3 trillion won.
There is potential for further orders this year. LG's Chief Financial Officer Kim Chang-tae stated during the second-quarter earnings conference call that the company aims to secure several trillion won in global AIDC project orders by year-end. In July, LG received final quality certification from NVIDIA for its self-developed 600 kW cooling distribution unit (CDU) and was added to NVIDIA's official cooling solution partner network (NPN) at the end of September.
Expectations are high that chiller sales will reach 1 trillion won this year. According to securities firms, the sales for the heating, ventilation, and air conditioning (HVAC) division are projected to be around 2.16 trillion won in the third quarter, exceeding 2 trillion won for three consecutive quarters. Chiller sales are estimated to account for about 13% of this total. Achieving 1 trillion won in sales this year would bring the target date forward by a year.
The challenge lies in the production capacity to handle the increasing order volume. LG is investing 150 billion won to build a chiller factory in Windsor, Virginia, covering an area of 32,000 square meters. The company is also expanding production lines for air-cooled chillers at its factories in Pyeongtaek and Changwon, South Korea.
However, until the Virginia factory is operational, LG must fulfill North American supply demands from existing production sites. To address this, the company plans to transition its domestic factories from a cell-based production method to a conveyor-based continuous production system by year-end. This strategy aims to enhance productivity by operating multiple lines simultaneously.
Ryu Jae-cheol, CEO of LG Electronics, emphasized on social media that "cooling technology is a key factor not only for energy savings but also for securing additional AI computing power," stating that it will be a decisive differentiator in the future AI infrastructure market.
* This article has been translated by AI.
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