"Fully Booked Through 2029"... LG Innotek Aims for 1 Trillion Won Operating Profit in Package Solutions by 2031

Sales Up 18%, Operating Profit Soars 82%: A Core Growth Engine
Surging Substrate Demand Driven by the Spread of Inference AI
Accelerating with 50 Years of Technology and Capacity Expansion in Vietnam and Gumi

"Customers have secured both chips and packaging, but are left in a bind because there are no substrates available."

Amid a semiconductor substrate shortage driven by the expansion of artificial intelligence (AI), LG Innotek has unveiled a blueprint to grow its package solution business to an operating profit of 1 trillion won by 2031. The company plans to leverage over 50 years of accumulated technological competitiveness and proactive capacity (CAPA) expansion to secure leadership in the global semiconductor substrate market.

George Tae, Executive Vice President and Head of the Package Solution Business Division at LG Innotek, is explaining the mid- to long-term growth scenario of the Package Solution business. LG Innotek

The Inference AI Era: Steep Growth in Semiconductor Substrates

On June 17, LG Innotek announced this business strategy during its "Media Tech Day" event at its Magok headquarters in Gangseo-gu, Seoul.

The package solution business, centered on semiconductor substrates, has recently shown rapid growth, enhancing LG Innotek's profitability. Last year, package solution business sales reached 1.72 trillion won, up approximately 18% from the previous year's 1.46 trillion won. Over the same period, operating profit surged from 70.8 billion won to 128.9 billion won, an 82% increase. In the first quarter of this year, operating profit also jumped 31% year-on-year, positioning the business as one of the company’s core profit drivers.

This growth is underpinned by a structural increase in semiconductor substrate demand driven by AI expansion. In particular, the AI market, which was previously focused on "learning-based" applications centered around graphics processing units (GPUs), is rapidly shifting to "inference-based" applications that process massive amounts of data in real time. As a result, demand for substrates for related memory and central processing units (CPUs) is rising quickly. In addition, the spread of 5G communications and the trend toward higher specifications in premium smartphones are further intensifying the substrate shortage.

George Tae, Executive Vice President and Head of Package Solution Business at LG Innotek, explained, "Based on long-term supply agreements (LTAs) with penalty clauses, we are already fully booked through 2029, which demonstrates the robustness of the market. We are proceeding with contracts focusing on customers who designate LG Innotek as either their main or secondary vendor."

50 Years of Unwavering Substrate Technology

RF-SiP substrate of LG Innotek applied with Copper Post (Cu-Post) technology. LG Innotek

LG Innotek cited its unrivaled substrate technology as the primary driver for achieving the 1 trillion won operating profit goal. In particular, its radio frequency system-in-package (RF-SiP) substrates, which connect communication semiconductor components with the mainboard, embody over 50 years of expertise in high-density, ultra-precision substrate technology, with 1,868 related patents. In 2011, LG Innotek became the first in the world to apply the coreless process, reducing substrate thickness by 20%. The company also applied the "Cu-Post" process, which erects copper pillars on the semiconductor substrate to connect solder balls, thereby increasing circuit density while further reducing thickness.

Based on these advancements, LG Innotek has maintained the No. 1 position in the global RF-SiP market since 2016. As of last year, the company held a market share of about 65% (based on the global top five RF customers) and expects this figure to rise to 80% this year.

The flip chip chip scale package (FC-CSP) substrate, which was mainly used for mobile application processors (APs), is now expanding into the memory sector in line with the shift toward inference-based AI. The company explained that FC-CSP substrates offer superior electrical and high-density characteristics compared to conventional memory substrates, making them advantageous for improving chip performance. Jeongho Hwang, Senior Vice President of Package Solution Marketing, said, "Recently, we have secured an order from a global semiconductor customer for FC-CSP substrates for GDDR7."

For large devices such as PCs, servers, and AI accelerators, the FC-BGA substrate is a field where LG Innotek entered as a latecomer but is rapidly gaining ground. The company has already secured mass production technology for large-area substrates up to 85mm in width and length and is also developing ultra-large substrates exceeding 120mm. At the "Dream Factory," an FC-BGA dedicated production line established by acquiring the Gumi Plant 4 in 2022, LG Innotek began mass production of PC chipset substrates for major global tech customers in December 2024. From the third quarter of this year, the company also plans to begin mass production of PC CPU substrates for the same customers. Senior Vice President Hwang stated, "With the advent of inference-based AI, the share of memory and CPUs has increased, leading global tech giants to approach LG Innotek directly to discuss the supply of FC-BGA substrates for CPUs."

Targeting 1 Trillion Won Operating Profit by 2031... Capacity Expansion as a Strategic Move

Leveraging its technological competitiveness, LG Innotek has set a goal to more than double its package solution business sales by 2030 and achieve 1 trillion won in operating profit by 2031. Executive Vice President Tae stressed, "This is not a goal that is just about numbers; it's a realistic figure calculated based on solid alignment with global customers."

The company also laid out concrete execution plans to achieve this goal. This month, LG Innotek will break ground on a new semiconductor substrate plant in Vietnam, initially expanding the RF-SiP and FC-CSP production lines to meet domestic and overseas customer demand. Around 1 trillion won will be invested in the RF-SiP and FC-CSP (PS) plant in Vietnam, and several hundred billion won will be allocated to the FC-BGA expansion. Since the Vietnamese subsidiary will fund these investments itself, there is minimal burden on domestic capital procurement.

In addition, LG Innotek is discussing a "financial commitment" investment model, where customers participate in capacity expansion by providing advance payments, and is also pursuing capacity expansion at the Gumi plant in Korea. Executive Vice President Tae explained, "Our strategy is to secure stable sources of orders through investments and technological competitiveness, even if the market turns downward in the future."

This content was produced with the assistance of AI translation services.