LG Electronics Becomes Nvidia Partner, Shares Rise 3% in Premarket

Shares of LG Electronics (066570) rose more than 3% after the company was named a partner for Nvidia's artificial intelligence data center power and cooling business. Investment demand is flowing in as the company's long-cultivated cooling solutions business gains a full-fledged opportunity to expand.

LG Electronics traded at 215,500 won as of 8:04 a.m. on the 28th, up 3.11% from the previous session, according to Nextrade (NXT). The stock advanced even as most top market-capitalization names weakened under the twin burdens of high interest rates and high oil prices, with Samsung Electronics (005930) down 0.53% and SK hynix (000660) off 1.66%. The overall Nextrade market average fell 0.33%.

LG Electronics said the previous day that it had been formally registered as a power and cooling partner in the Nvidia Partner Network (NPN), Nvidia's official partner program. The NPN is a global program that seeks collaboration with companies across various fields based on Nvidia's AI technology ecosystem. The NPN selection allows LG Electronics to broaden its customer base. Analysts expect momentum for its cooling solutions business, which it has developed over many years, including chillers that produce cold water and coolant distribution units (CDUs) that use the water to cool server heat.

LG Electronics entered the data center cooling market in 2011. It has solidified its market position around large-scale air-cooled chillers, which dissipate heat using air, and water-cooled chillers, which use coolant. The company has focused mainly on the North American market, where global AI data center infrastructure is concentrated, and became the first Korean company to meet Nvidia's specification approval requirements with 600-kilowatt and 1-megawatt CDUs. It recently met the specification requirements for a 2.5-megawatt CDU, increasing the potential for expansion of its cooling solutions business.

Securities analysts estimate that LG Electronics secured about 600 billion won ($430 million) in orders for data center cooling solutions in the first half of this year. Given that it takes six to nine months from order to revenue recognition, data center cooling solutions are expected to account for about 20% of the Eco Solution (ES) division's revenue starting next year.