Samsung Electronics booth at the 2024 AHR Expo in Chicago, US (Courtesy of Samsung Electronics)
Samsung Electronics Co. will set up a heating, ventilation and air conditioning (HVAC) joint venture with Lennox International Inc., a major US HVAC system company, to quickly catch up to bigger rivals in the burgeoning North American HVAC market estimated to grow to $48.8 billion in 10 years.
The South Korean electronics giant announced on Tuesday that it agreed with Lennox International to establish an HVAC joint venture, called Samsung Lennox HVAC North America, with 50.1% and 49.9% stake ownership, respectively.
Samsung did not disclose its investment size, but industry observers estimated it invested hundreds of billions of won in the joint venture
The new joint venture will start operation in Texas in the second half of this year.
Founded in 1895, Lennox manufactures and sells both residential and commercial HVAC systems. It is one of the US top five HVAC providers, boasting a strong retail network of local dealers and homebuilders, and raked in 1 trillion won ($735.6 billion) in operating profit last year on sales of 6.7 trillion won.
Lennox logo (Courtesy of Samsung Electronics)
With Lennox, Samsung Electronics boasting 40 years of HVAC technology development is expected to create great synergy in the HVAC market, which would expedite the expansion of the Korean company’s footing in North America, one of major HVAC markets, and enable the Korean partner to join the top-tier HVAC group.
BSRIA’s Worldwide Market Intelligence forecast the North American HVAC market to grow to $48.8 billion in 2034 from $32 billion in 2024.
LENNOX POWERED BY SAMSUNG
The Samsung-Lennox joint venture will sell Samsung’s ductless air conditioners and heat pumps, including mini-split, multi-split and variant refrigerant flow (VRF) types, in the US and Canada.
It plans to supply “Lennox Powered by Samsung”-branded products for Lennox, which will be sold through Lennox stores and direct-to-dealer network.
Samsung will also continue to sell its HVAC products at existing Samsung Electronics dealers in the country.
Such a two-track approach is expected to help Samsung expedite its push to expand its presence in the North American HVAC market.
Lennox is also expected to benefit from diverse product lineups including those of Samsung Electronics, which would further enhance the US partner’s competitiveness in the HVAC market.
Samsung Electronics booth at the 2024 AHR Expo in Chicago, US (Courtesy of Samsung Electronics)
Samsung Electronics also plans to offer its product buyers Samsung AI service that connects home devices and electronics systems to allow users to control them remotely.
RAPID PENETRATION
Samsung Electronics is seeking to make a speedy foray into the HVAC market, which has been growing rapidly in recent years due to rising demand for power-efficient HVAC systems amid the global decarbonization push.
Earlier this year, it even joined a bid for Johnson Controls International’s heating and ventilation assets worth over $6 billion, which is still ongoing.
The North American HVAC market is, however, commanded by bigger players such as Japan’s Daikin, as well as China’s Midea Group and Gree Electric Appliances.
Johnson Controls, Carrier, Panasonic, LG Electronics Inc. and Samsung Electronics trail behind them.
Central air conditioning systems account for about 70% of the US HVAC market, but demand for ductless systems is growing in the country thanks to its high energy efficiency rate.
Samsung Electronics with leading ductless AC technologies will use the US market as a springboard to global expansion.
By Chae-Yeon Kim
why29@hankyung.com
Sookyung Seo edited this article.
