From cell phones to water filters; LG shifts gear

LG electronics may be one of the world’s biggest manufacturers of TVs and phones but it looks like the company is not content to rely on its traditional electronics base. LG just announced its intention to enter the water-treatment business and to generate $7 billion in revenue from this area by 2020.

LG admitted to having no previous experience with water treatment technology but intends to invest $400 million in this new business in the next decade. It said this marks the start of a major change in direction for the company and the search for a new growth engine.

Filtration basically removes solids from liquids and is normally the last step in the water-purification process. Various types of permeable membrane can be used to remove both salts and dissolved organic matter. LG will concentrate on developing an advanced membrane filtration system, in particular reducing the size and increasing the efficiency of the membrane.

LG intends to begin by targeting industrial water treatment, later expanding into sewage and drinking water treatment. The company eventually plans to enter the business of water treatment engineering and procurement as well as operation and maintenance across the municipal sector. Its main competitors would be GE, which has been investing heavily in water technology in recent years, and Siemens.

This isn’t LG’s first foray into clean tech. In 2008, it attempted to acquire a 75% stake in Conergy’s Frankfurt solar-panel plant but ended up rescinding the offer at the height of the financial crisis. LG also hasn’t fared well in Greenpeace’s guide to greener electronics. The company fell from 6th to 12th place in the 2010 guide. So this announcement may also be an attempt to build an image of a greener company.

This announcement suggests intriguing possibilities for other manufacturers of consumer electronics. Can we next expect to see Apple selling solar panels?

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