LG Energy Solution was seeking to foster more suppliers it deals with directly instead of going through LG Electronics’ Production engineering Research Institute (PRI), TheElec has learned.
Up to now, LG Energy Solution used battery equipment maker through LG PRI.
In this arrangement, the equipment makers will pay parts of their profits to LG PRI as the supply contracts are signed between them, instead of directly with LG Energy Solution.
LG Energy Solution was now planning to sidestep LG PRI and place orders more to equipment suppliers it fosters on its own.
The battery maker was actively replacing its suppliers that are registered with LG PRI with new companies, people familiar with the matter said.
If two companies offer the same process equipment, LG Energy Solution will use the firm that wasn’t involved with LG PRI over the other, they said.
This process was being overseen by LG Energy Solution executive vice president Jeon Soo-ho. Jeon was working with vice president Yang Ki, who oversees equipment technology, on process and R&D. Jeong manages the process, while Yang manages the equipment.
Jeon was previously the panel factory director of Philips LCD (Now LG Display). He was transferred to LG Chem in 2016. He was the head of global production center of the battery business at LG Chem, and joined LG Energy Solution when it split off. He is considered the key player that helped LG increase its battery production competence.
Jeon’s efforts led to LG using laser notching for the tab process over press notching. Under his leadership, LG fostered DE&T, an affiliate of APD Holdings, to supply the laser equipment for use at LG’s battery factories in China and Poland. LG also began using DSK for lamination and stacking equipment.
DE&T and DSK’s kits replaced those of DA Technology, Shinjin Mtec and Naintec, companies that are registered to LG PRI.
As LG Energy Solution secure more of its own suppliers, those registered with LG PRI are likely to negatively affected by the move. The latter also need to share their profits with LG PRI.
Those in sales for the existing equipment suppliers are relying on LG PRI on the matter, a person familiar with the matter said. They may want to deal directly with LG Energy Solution, but a lot of the times LG Energy Solution have already developed similar kits offered with other vendors, making it difficult for existing suppliers, they said.
Another person familiar with the matter said many employees at LG Energy Solution were transferred to these new equipment suppliers. This means LG Energy Solution will prefer these new equipment suppliers that have no dealing with LG PRI over existing suppliers, they said.
LG PRI, part of LG Electronics, was founded in 1987 to develop production equipment for LG affiliates. LG PRI will develop and design equipment, and suppliers will manufacture these equipment based on the designs. They will share the profits.