UPDATED. 2024-06-17 07:51 (월)
Apple asked us to vouch for suppliers: LGE
Apple asked us to vouch for suppliers: LGE
  • Gijong Lee
  • 승인 2019.07.04 16:37
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“It’s all a misunderstanding and a thing of the past”
Hong Soon-kook
Hong Soon-kook, head of LGE's center for material production and equipment innovation.

The head of LG Electronics’ center for material production and equipment innovation has denied that the center every took illicit profit from suppliers as part of an “unspoken agreement.”

“There’s no more confusion or controversy on this,” Hong Soon-kook, the chief of the center, told The Elec on the sidelines of Nano Korea 2019 held in Kintex on July 3.

The center designs production equipment for LG units, based on which suppliers manufacture them. For a long time, it has also been serving as a quality control unit. As a result, suppliers had to sign supply contracts with the center, and not directly with the involved LG units.

Stressing that the practice is a thing of the past, Hong said the process was necessary to certify the quality of the suppliers.

“Apple, for instance, doesn’t trust the Korean suppliers enough, and would never deal with them one-on-one, let alone sign a contract,” he said.

He added the American company had been blunt about asking the institute to vouch for the suppliers. “Otherwise, the deals could have never happened,” he said. “By going through us, the suppliers get to sign on with Apple.”

As an example, he said the center was able to persuade Apple to recruit a domestic supplier instead of a German manufacturer through this method. “This kind of support helped the suppliers pick up new technology and grow exponentially,” he said.

Hong did concede that the process could appear as if the center was walking away with illicit commission. That’s why over the past few years, the center has been increasingly asking the affiliates to sign directly, without going through the center.

The CEO added that the center doesn’t rely on such revenues anymore, and is now focused on R&D.

“Our goal is to have solutions when overseas equipment makers ask for unreasonably high prices,” said Hong.

LG Electronics established the materials and equipment center in 1987 to help cut costs and enhance the group’s technological prowess overall.

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