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Camera modules

LG Innotek eyes record profit, revenue on strong camera module sales

LG is expanding facility investment to meet the demand for Apple’s high-end iPhone 13

By Jun 07, 2021 (Gmt+09:00)

LG Innotek, a major camera module supplier for Apple’s iPhones
LG Innotek, a major camera module supplier for Apple’s iPhones

LG Innotek Co., a major camera module supplier for Apple Inc.’s iPhones, is looking to post a record operating profit and sales this year as it is expanding its share of the global market for the key smartphone component.

According to industry analysts on Monday, the components unit of South Korea’s LG Group is expected to post more than 1 trillion won ($0.9 billion) in operating profit on sales of over 10 trillion won this year, both marking its highest levels.

Already the world’s top camera module maker, LG Innotek expects its market share to rise above 20% this year from 14.9% in 2020.

In the first three months of this year, the company said its global camera module market share reached 20.2%, the first time its share rose above 20% in the first quarter, usually an off-season.

High expectations for LG Innotek’s improving performance come as its key customer Apple is moving to significantly upgrade the camera capabilities for its new iPhone models set to launch from the second half of this year.

The US smartphone maker recently surprised the market by selling more than 50 million units of the iPhone 12 in just two months of its launch.

APPLE’S HIGH-END iPHONE 13 TO BOOST INNOTEK’S SALES

The entire iPhone 13 lineup, Apple’s next-generation iPhones, will reportedly feature the sensor-shift optical image stabilization (OIS) function, available only in high-end iPhone 12 Pro Max models.

Sensor-shift OIS helps the camera stabilize an image by rapidly adjusting its optical path in real-time to correct for a shaky hand or bumpy car.

LG Innotek's telecommunication module for cars
LG Innotek's telecommunication module for cars

LG Innotek said currently it is the exclusive supplier of the OIS system modules, more expensive than other modules, for Apple iPhones.

To expand its facilities and upgrade equipment, LG Innotek said earlier this year its Optics Solution Business unit will spend 547.8 billion won in facility investment in 2021, nearly double its 2019 investment of 282.1 billion won.

“LG’s aggressive facility investment is closely linked to Apple’s upgrade of its camera functions,” said an industry official.

In the first quarter, LG Innotek posted an operating profit of 346.8 billion won on revenue of 3.07 trillion won, up 97.3% and 55.6%, respectively, from the year-earlier period.

Besides LG's Optics Solution Business unit, which accounts for some 70% of its total sales, the company’s other businesses that make auto parts and materials for semiconductor circuit boards are also witnessing their global market shares are increasing.

LG Innotek’s auto components division, which accounts for 10% of its sales, swung to profit for the first time in the first quarter with 10.7 billion won in operating profit.

The company’s motor sales that account for the lion’s share of its auto parts business saw its market share rise to 12.6% in the first quarter from 10.2% at the end of 2019.

QUALITY RECOGNITION FROM JAGUAR LAND ROVER

LG Innotek CEO Jeong Cheol-dong
LG Innotek CEO Jeong Cheol-dong
Last month, LG said the quality control system in its auto parts business was recognized by Jaguar Land Rover, the British premium car manufacturer.

LG’s DC-DC converter product that it supplies to Jaguar Land Rover was recognized for the excellent performance and quality of its products, it said.

A DC-DC converter converts a high-voltage direct current coming from the battery to a low-voltage direct current suitable for automotive components.

Automotive components are subject to strict quality control from automakers as their quality is directly related to the safety of drivers and passengers, and Jaguar Land Rover’s approval of the quality of LG’s component is meaningful, according to an LG Innotek official.

LG Innotek’s chipboard materials business also saw its market share increase to 30% recently from 22% in 2019.

“We are aiming to achieve quality growth this year to consolidate our global leadership,” said Chief Executive Jeong Cheol-dong.

Write to Shin-Young Park at nyusos@hankyung.com

In-Soo Nam edited this article.

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