As iPhone Cameras Improve... This Company Becomes a Beneficiary Stock

On the 7th, when Apple's new iPhone 14 series was officially released in Korea, citizens lined up at the Apple Store in Myeongdong, Jung-gu, Seoul to purchase the product. Photo by Moon Honam munonam@

[Asia Economy Reporter Park So-yeon] Strong sales of the iPhone 14 Pro series are driving the performance of related component companies.

On the 20th, according to the financial investment industry, Kiwoom Securities stated in a recent report on LG Innotek that "profit growth led by optical solutions is possible next year as well."

Kiwoom Securities evaluated that "the strong performance of the iPhone Pro and Pro Max, along with production plan adjustments focusing on the Pro series, are favorable for LG Innotek."

While the sales proportion of high-performance models iPhone Pro and Pro Max was below half at 47% for the iPhone 13 series, it is expected to exceed 60% for the iPhone 14 series.

Sangsangin Securities also estimated, "During the one year after the launch of the iPhone 14, the share of high-end models (Pro, Pro Max), which are LG Innotek's main supply targets, is estimated to be between 60-65%," adding, "There is no doubt about Innotek's benefits."

Meanwhile, Korea Investment & Securities forecasted stable iPhone shipments in 2023. The estimated iPhone shipment volume for next year is 240 million units, an increase of 3.1% compared to the previous year.

With Apple confirming the inclusion of a folded zoom camera in the iPhone 15 (tentative name) to be released next year, LG Innotek's role is expected to grow further. The folded zoom camera, which operates on a principle similar to a periscope, helps reduce the camera bump (camera protrusion) on smartphones to some extent.

Apple had not applied the folded zoom camera to smartphones until now partly due to Samsung Electronics holding the patent. Samsung Electronics applied this folded zoom camera to the Galaxy S20 Ultra, released in March 2020, achieving 100x zoom.

Apple circumvented this patent and registered a new one. LG Innotek, which supplies a significant portion of Apple’s camera modules, will handle the supply. Mass production of folded zoom cameras for the iPhone 15 is expected to begin in March next year.

LG Innotek has been conducting a folded zoom camera module development project with Apple since last year. Jahwa Electronics, which was part of Samsung Electronics' supply chain, also appears to have joined Apple. Jahwa Electronics possesses technologies such as integrated actuators for optical image stabilization (OIS) and autofocus (AF). LG Innotek is responsible for both the rear and front cameras of the iPhone.

Although global smartphone shipments are on a declining trend, the advancement of high-value-added products like camera modules continues steadily. The folded zoom camera is also a field expected to grow in the market amid this trend.

According to a Samsung Securities report, the folded zoom camera market is about 15 million units based on smartphone volume, but from 2023, when Apple begins applying it, market growth is expected to exceed 40 million units.