"Business Diversification, Performance to Be Felt by Year-End"
Minimal Impact from Chasm and Tariffs... Performance Rebound Expected Next Year
LG Innotek Shareholders' Meeting Appoints Kim Junghoe of the Semiconductor Association as Director
LG Innotek plans to focus on its semiconductor substrate business to overcome performance declines caused by the entry of Chinese companies into the camera module market, while also strengthening its automotive electronics parts business to aim for a performance rebound. Since taking office, Moon Hyuk-soo, CEO of LG Innotek, who has been seeking to diversify the business portfolio, emphasized, "We expect to see changes in overall business performance as early as the end of this year."
Moon Hyuk-soo, CEO of LG Innotek, revealed this plan on the morning of the 24th during a meeting with reporters after the '49th Annual General Meeting of Shareholders' held at LG Science Park in Magok, Gangseo-gu, Seoul.
Moon Hyuk-soo, CEO of LG Innotek, is answering questions from reporters about business strategy after the '49th Annual General Meeting of Shareholders' held on the morning of the 24th at LG Science Park in Magok, Gangseo-gu, Seoul. Photo by Jang Hee-jun
When asked about measures to improve the still high proportion of optical solutions despite efforts to diversify the portfolio, Moon said, "Mobile-related businesses launch new products on a yearly basis, but areas like semiconductors and automotive electronics have much longer cycles." He added, "We have already secured orders worth 4 to 5 trillion won annually, but there is a time lag before these are reflected in performance, so visible results are not yet apparent."
LG Innotek plans to start mass production of high-performance package substrates (FC-BGA) for PCs, following its initial mass production, and aims to begin mass production of server products from next year. The new glass substrate business is expected to start mass production as early as 2027.
Moon said, "We have supplied FC-BGA substrates to global big tech companies for PC products first, and are currently undergoing certification for server products with another client," adding, "Due to large investments this year, the break-even point is expected to be reached around the year after next." FC-BGA is a high-performance substrate used to connect advanced semiconductors to IT devices or to combine multiple chips. It is a business LG Innotek is focusing on and recently began mass production at its Gumi Plant 4.
He also projected the commercialization of the glass substrate currently under development to be in 2027. He explained, "For good performance, the glass needs to be thick while the connecting circuits must be small, but we have not yet reached the desired level," adding, "These issues are expected to be resolved between 2027 and 2028." He continued, "Glass substrate equipment is scheduled to arrive in October, and we are collaborating with big tech companies," noting, "We are focusing more on the substrate side compared to competitors' interposers."
LG Innotek exhibition booth set up at the 'CES 2025' exhibition hall held in January this year. Provided by LG Innotek
LG Innotek experienced performance deterioration as many Chinese companies entered the camera module market. About 80% of the company's sales come from camera modules supplied to Apple, and the fact that Apple is seeking performance improvements for the iPhone 17, to be released this fall, through artificial intelligence (AI) technology rather than hardware also played a role.
Moon said, "Smartphone cameras have reached a considerable level of technological parity with Chinese companies, and LG Innotek shows differentiated competitiveness only in a few special cameras equipped with features like continuous zoom," adding, "We expect a portfolio shift focusing on product groups with distinct differentiation."
He added, "Products with a technological gap compared to China will be produced domestically, while cameras without such a gap will be manufactured in places like Vietnam," and said, "Cameras used in smartphones, as well as those for automobiles, drones, and robots, face difficulties in production in China when considering sales in the U.S. market, so we plan to respond accordingly."
When asked about the impact of the electric vehicle chasm and additional damage from U.S. tariff policies on the automotive electronics business, he drew a clear line, saying the impact is minimal.
He explained, "Motor and connectivity parts are used not only in electric vehicles but also in existing internal combustion engine vehicles, so the impact is limited," adding, "Although it is called a chasm, it means the growth rate has slowed rather than demand decreasing, so we expect to get back on track and grow from the end of this year or next year."
Regarding tariffs, he said, "Products mass-produced in Mexico are subject to customers bearing the tariffs, so there is no immediate impact," and added, "To minimize any potential impact, we have established production bases in Vietnam, Indonesia, and other locations." The Mexico plant is expected to begin full-scale production in October.
Jensen Huang, CEO of NVIDIA, appeared with 14 humanoid robots at 'CES 2025' held in January this year. Photo by AFP Yonhap News
Additionally, LG Innotek is collaborating with half of NVIDIA's humanoid robot partners. Jensen Huang, CEO of NVIDIA, attracted attention by appearing with 14 humanoid robots at 'CES 2025' in January this year. Regarding this, Moon said, "Humanoids will be practically applied to business starting next year," adding, "Although not in large quantities, we are preparing for mass production on the scale of thousands of units."
LG Innotek is developing camera technology and joint parts, areas where it already has strengths, together with partner companies. Moon predicted, "By 2027-2028, the humanoid-related business is expected to grow tenfold annually," and said, "While humanoids being used in daily life is a story for the more distant future, their application in factories or forms where robots work independently without human cooperation is expected to increase."
Meanwhile, at the shareholders' meeting held that day, LG Innotek approved four agenda items as originally proposed: approval of the 49th financial statements, appointment of directors, appointment of audit committee members, and approval of director remuneration limits. Additionally, by appointing Kim Jung-hoe, Vice Chairman of the Korea Semiconductor Industry Association, as a new outside director, the company emphasized nurturing its semiconductor parts business.
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