[Asia Economy Reporter Park Sun-mi] LG Innotek is expected to see an increase in Apple-related sales in the third quarter due to supplying front and rear camera components for the Apple iPhone 14 series, scheduled for release in September.
On the 25th, the IT parts industry is placing weight on the possibility that LG Innotek's sales proportion to Apple, which accounts for about 75%, will further expand. This is because LG Innotek will supply both front and rear camera components for the Apple iPhone 14 series, set to launch in September, and the environment is being created where it can also benefit from price increases and exchange rate effects as a 'bonus.'
The industry expects LG Innotek to begin full-scale production of front and rear camera components for the iPhone 14 starting in August. Until now, LG Innotek had only supplied rear camera components for the iPhone series, but this year it has surpassed Chinese and Taiwanese companies to also supply front camera components.
Although smartphone sales have slowed due to inflation and weakened consumption, demand for premium phones remains strong, and the iPhone 14, scheduled for release in September, is expected to see expanded sales. KB Securities analyst Kim Dong-won explained, "The shipment volume of the iPhone 14 is estimated to increase by 20% compared to last year's iPhone 13 (100 million units), raising the possibility of improved LG Innotek performance in the second half."
Price increases and exchange rate effects are also expected to influence the expansion of Apple-related sales proportion. In the parts industry, even if raw material prices rise and production costs increase, it is difficult to raise supply prices. However, in LG Innotek's case, the significantly improved camera pixel technology has created room for higher selling prices. Moreover, the strong dollar trend, with the USD-KRW exchange rate surpassing 1,300 won, provides exchange rate benefits to LG Innotek, which is mostly export-oriented. According to the first quarter business report, the optical solutions division, which includes camera modules, recorded domestic sales of 48.8 billion won and exports of 3.0396 trillion won, showing an overwhelmingly high export ratio.
Based on its high Apple market share, LG Innotek, expected to show differentiated performance, is expanding production capacity by acquiring LG Electronics' Gumi A3 plant. On the 9th of this month, LG Innotek held a board meeting and approved the acquisition of land and buildings of LG Electronics' Gumi A3 plant, creating an environment to significantly increase production of camera modules and semiconductor substrates starting next year. LG Innotek has announced plans to invest a total of 1.0561 trillion won in the optical solutions business and 413 billion won in the semiconductor substrate FC-BGA business within this year.
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