이 기사는 2022년 02월 25일 08시07분 thebell에 표출된 기사입니다

South Korea's LG Electronics has decided to close its solar panel business, 12 years after it entered the business amid intensifying competition from Chinese rivals.

LG Group started its solar panel business in 2007 when late LG Group chairman Koo Bon-moo established LG Solar Energy by injecting 46 billion won ($38 million).

LG Electronics created an organization dedicated to the solar panel business under the Air Conditioner & Energy Solution (AE) division in 2010. After that, the business was separated from the division and operated as a research center.

In 2019, the business was incorporated into the Business Solutions (BS) division, which was established in 2018 by LG chairman Koo Kwang-mo to promote business-to-business (B2B) transactions. Koo and LG Electronics’ executives saw little chance of showing tangible results given the nature of B2B businesses.

LG Electronics has focused on premium solar panels such as N-type and double-sided cells. But its share in the global solar panel market stayed at around 1% due to the flood of cheaper Chinese products.

The energy business sector, which involves the solar panel business, didn’t quite fit into the BS division as its scalability of the total energy solution business such as energy storage system (ESS) and energy management system (EMS) was not that great.

Revenue of the solar panel business dropped from 1.1 trillion won in 2019 to about 800 billion won in 2020 amid fierce competition from low-cost Chinese suppliers.

LG Electronics’ domestic rival Hanwha Q Cells also saw a decline in revenue from 1.16 trillion won in 2020 to 990 billion won in 2021. Its operating loss increased from 2.4 billion won to 153.3 billion won in the same period. The company is expected to continue to report a loss in the first quarter of this year.

The closure of LG Electronics’ solar panel business is expected to be completed by June 30. (Reporting by Hyun-ji Sohn)