LG Innotek to invest $1.1 bn to ramp up substrate, camera module output

South Korea’s LG Innotek Co. said on Wednesday it will invest 1.4 trillion won ($1.1 billion) in expanding facilities for semiconductor substrates and camera modules.

The company will make the investment until 2023 to build a new production line for high-performance flip-chip ball grid array (FC-BGA) substrates and expand the facility for camera modules at its plant in Gumi, North Gyeongsang Province.

The investment will also create some 1,000 new jobs, the company said.

Chief Executive Jeong Cheol-dong and top government officials of Gumi city and North Gyeongsang Province signed a memorandum of understanding on the investment earlier on Wednesday.

FC-BGA is a package substrate that transmits electrical signals and power by connecting high-density semiconductor chips to the mainboard. It is mainly used for central processing units (CPUs) and graphics processing units (GPUs) that require high-performance and high-density circuit connections.

LG entered the FC-BGA market in February this year.

Substrates are key industrial components used not only in mobile and Internet-of-Things (IoT) devices but also in application processor (AP) chips and high-definition display panels such as OLED.

LG Innotek’s substrate business is largely divided into three ranges of products: semiconductor substrates, photomasks and tape substrates.

The company is already the world’s top maker of telecommunications chip substrates, including the Radio Frequency-System in Package (RF-SiP) substrates.

MAJOR SUPPLIER FOR APPLE iPHONES

LG Innotek, a major camera module supplier for Apple Inc.’s iPhones, said it is also looking to consolidate its market leadership in the camera modules.

Its Optics Solution Business unit, which produces camera modules, posted 11.8 trillion won in revenue last year, up 68% from the previous year.

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

Camera modules are also key vehicle components as automakers push for higher levels of autonomous driving.

Samsung Electro-Mechanics Co., the electronic components unit of Samsung Group, has won a multi-billion-dollar deal to supply camera modules to Tesla Inc. for most of the US company’s electric vehicles, according to industry sources on Wednesday.

LG Innotek said it will have a total of five plants for substrates and camera modules in Gumi when the 1.4 trillion won investment is completed.

Aided by its production ramp-up, the company’s sales are expected to rise further in coming years.

The market consensus for LG Innotek’s overall sales revenue for 2022 is 17.27 trillion won, compared with last year’s sales of 14.95 trillion won.

Write to Shin-young Park at nyusos@hankyung.com
In-Soo Nam edited this article.