Samsung’s ODM pivot, SK’s exit, and why LG is still standing
Why Korea’s Conglomerates Are Abandoning Home Appliances — The House Is Getting Smaller
Samsung’s ODM pivot, SK’s exit, and why LG is still standing
by Kayjay · Founder & Editor, OFF PLAN
I work in interior design and construction. Coordinating with builders on built-in appliance specs, reviewing what goes into each space — it’s a recurring part of the job. Over the past few years, something has quietly shifted. Samsung built-ins are showing up less. LG holds steady. SK Magic has almost disappeared from spec sheets entirely.
The site tells you before the numbers do.
Samsung and SK Are Walking Away
Samsung Electronics formalized its appliance restructuring in April 2026. The DA division announced the closure of dishwasher and microwave production lines, a shift to ODM manufacturing, closure of its Malaysia factory, and a review of its China appliance business exit. None of this came out of nowhere.
Samsung’s Bespoke dishwashers have been manufactured by China’s Midea on an ODM basis since 2006. A significant portion of its wall-mounted air conditioners come from TCL via ODM. Samsung designs, China builds, Samsung puts its name on it — under the Bespoke brand. The controversy surfaced when consumers noticed Cuckoo selling what appeared to be the same Midea product at half the price.
SK moved faster. After acquiring Dongyang Magic in 2016 and rebranding it SK Magic, the company began reviewing its appliance exit in 2023. By January 2024, it had transferred the gas range, electric range, and oven business to Kyungdong Navien for 37 billion won. Dishwashers were discontinued in March. By July 2025, the company had renamed itself SK Intellix — leaving only water purifiers, air purifiers, and bidets under the SK Magic brand. All of this within eight years of the original acquisition.
The Numbers Behind Korea’s Shrinking Purchasing Power
The most visible cause is profitability pressure. Chinese manufacturers have made competition in the mid-range segment effectively impossible, while raw material, labor, and logistics costs have risen simultaneously. Premium large appliances — refrigerators, washing machines — still carry margin. Commodity products like microwaves and dishwashers no longer do, not against Chinese pricing.
But beneath the profitability story sits a structural problem.
KDI — Korea’s state economic research institute — found that over the past twenty years, prices have risen faster than incomes, dragging the average annual growth rate of private consumption down by 0.4 percentage points. When real GDP grows by 1%, real private consumption grows by only 0.74%. The economy expands; the wallet doesn’t follow at the same pace.
Korea’s GDP growth in 2023 was 1.4%. Consumer price inflation the same year ran above 3.5%. Real purchasing power went backward. KDI projects Korea’s potential growth rate will fall to the mid-to-high 1% range between 2025 and 2030 — down from nearly 6% in 2001, a quarter of its former level in two decades. Working-age population is shrinking. Total factor productivity growth is declining. This is structural, not cyclical.
The demographic picture sharpens it further. Total fertility rate below 0.7. Single and two-person households now exceeding half the total. Sub-60㎡ units growing as a share of new housing stock. In this environment, projecting domestic demand growth for large-format refrigerators and high-capacity drum washers is not a credible exercise.
Real Estate and Appliances Are Connected
Working in construction makes this linkage tangible. When people move, they replace appliances. Redevelopment and renovation cycles generate built-in replacement demand. That pipeline has been thinning.
Korea’s housing transaction volume peaked in 2021 and has been in structural decline since. Commercial real estate transactions fell from a high of 96,000 deals in 2021 to 46,000 in 2024 — three consecutive years of decline, roughly half in three years. Fewer transactions mean fewer moves. Fewer moves mean fewer appliance replacements. Fewer replacements mean a contracting domestic market.
Samsung Economic Research Institute is one of the most sophisticated analytical organizations tracking this. Whether the decision to shift mid-range appliance production to ODM and exit China represents a response to short-term margin pressure, or a longer-horizon judgment that the domestic market itself is structurally shrinking — the two are hard to separate. But they point in the same direction.
Samsung Bets on the Platform. What About LG?
Samsung’s strategic response is a pivot from manufacturing to platform. SmartThings connects Samsung devices and third-party devices alike. Whether any given appliance was made in a Samsung factory or a Midea factory becomes secondary to whether it connects to the ecosystem. SmartThings supports Matter, integrates with Apple HomeKit and Google Home, and has received genuine recognition for its ecosystem breadth. The bet is coherent.
LG is holding a different position. Domestic production remains high — the Changwon factory is still running, and LG maintains self-manufactured product lines across refrigerators, washing machines, air conditioners, and dishwashers. That’s a strength, and a cost burden simultaneously.
The weak point is ThinQ. The platform’s technical foundation is adequate, but the app is heavy, the UI unintuitive, and cross-brand integration is more limited than SmartThings. Accumulated user frustration is real.
LG acquired Dutch smart home platform company Athom in 2024 — the developer of the Homey hub, which connects over 50,000 appliance and IoT device types. The intent is to compensate for ThinQ’s relative closedness with Athom’s open ecosystem. Separately, in 2021, LG acquired US advertising analytics firm Alphonso to expand the webOS ad platform business. The strategic direction is right. Whether the Athom acquisition translates into a materially better ThinQ experience for end users is a question the market has not yet answered.
Appliance buyers increasingly lead with ecosystem over brand. The question is no longer “which brand?” but “does this connect to what I already have?” Making a good washing machine is no longer sufficient to hold a position in that conversation.
What the Site Tells You
When discussing built-in specifications on a job, the first question used to be “where is it made?” Now it’s “does this integrate with the existing system?” That shift in the question reflects the shift in the market.
SK has exited the conversation — moving from appliances into health-focused rental and AI wellness platforms. Whether that proves correct is unknown. But the direction of the underlying forces is not ambiguous. Korea’s homes are getting smaller. Transactions are falling. Purchasing power is being compressed structurally. In that environment, the question of who survives is not answered by building a better refrigerator. It’s answered by building a tighter ecosystem.
Kayjay is an interior designer and construction project manager. Founder & Editor of OFF PLAN Magazine (offplan.online).
