LG Electronics enjoys patent profits in first quarter Firm projects operating profit up 6.4% on patent profits and strong home appliance business
Translated by Kim So-in 공개 2022-04-11 08:12:29
이 기사는 2022년 04월 11일 08:06 thebell 에 표출된 기사입니다.
South Korea’s LG Electronics estimated its January-March operating profit to be larger than the market estimate, thanks to hefty patent profits.In its earnings guidance, the South Korean tech firm projected its first quarter revenue at 21.1 trillion won ($17.2 billion) and operating profit at 1.88 trillion won, up 18.5% and 6.4% from a year earlier, respectively.
The company surprisingly achieved strong results considering that the first quarter is traditionally off-season for the electronics market.
The tech firm’s first-quarter performance beat market consensus which forecast 19.88 trillion won in revenue and 1.34 trillion won in operating profit, according to financial information provider FnGuide.
The strong results are attributable to robust sales in premium home appliances and one-off patent profits, an LG Electronics official said. The company didn’t disclose details about its one-off profits from patents, citing the confidentiality clause on contracts.
LG Electronics has stepped up efforts on its patent business. It newly hired Jang Jin-ho to lead the company’s patent management.
LG Electronics decided to shut down its mobile phone business in phases, instead of selling it off, to benefit from patent profits. Some Chinese manufacturers reportedly expressed interest in purchasing intellectual property owned by the Korean firm in partnerships with smartphone makers Xiaomi or Oppo. Vietnam’s Vingroup, U.S.-based Google and Facebook and Germany’s Volkswagen were also interested in LG Electronics’ mobile phone business.
The global companies tried to acquire LG Electronics’ patent rights, which determined the deal size and terms and conditions of a contract. In 2021, LG Electronics boasted 22,899 domestic patents and 58,583 overseas patents related to the next-generation communication standard and multimedia codec technology. It had 2,396 smartphone-related patents in Korea, 2,162 in the U.S., and 646 in China, which were more than Apple’s 380 in Korea, 2,529 in the U.S. and 519 in China.
However, LG Electronics decided not to sell the division to prevent leakage of core technologies. “Core mobile technologies are important assets not only for mobile phone devices, but also for smart home appliances, automotive electronics, robots and artificial intelligence (AI) businesses,” said the company during its conference call.
Its decision has borne fruit. Last year, LG Electronics signed an agreement to license its long-term evolution (LTE) standard essential patents (SEP) to Tinno Mobile, the Chinese parent company of European mobile phone brand Wiko. Under the deal, Tinno Mobile will have to pay royalties for using LG Electronics’ LTE patents in all Wiko-branded phones marketed worldwide.
The Korean tech firm is also putting efforts to make headway in 6G technologies. It has partnered with Korea Advanced Institute of Science and Technology, South Korea's leading research university, and Keysight Technologies, a U.S.-based electronics test and measurement equipment provider, to develop next-generation 6G network technology. The 6G network is expected to be commercialized in 2029. (Reporting by Hyun-ji Sohn)
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