The Era of Sole Reliance on Apple Ends... LG Innotek Ushers In 'Year-Round Peak Season' with Robotics and Automotive 'Vision'

Reducing Reliance on Mobile Camera Modules
Transforming Optical Solutions Through Autonomous Driving and Robotics Sensing

Turnkey Competitiveness in Camera, LiDAR, and Radar
Secured at Least Three Major Automotive Clients
Aiming for

LG Innotek, whose performance has historically fluctuated depending on Apple iPhone sales, is accelerating its organizational transformation. The company is diversifying its portfolio away from the traditional mobile camera module business and into autonomous driving and robotics sensing, as well as high-value-added semiconductor substrates. As a result, the so-called "low first half, high second half" pattern—which referred to earnings droughts in the first half—has been broken, with the company now being evaluated as having established a structure for stable, year-round profitability.

LG Innotek employees are holding the core components of vehicle sensing solutions, the 'high-performance LiDAR' (left and right) and the 'heating camera module.' LG Innotek

Expansion into Autonomous Driving and Robotics, Independent Production of Three Core Sensors as Key Strength

LG Innotek’s business has long been centered on a single major customer (Apple) through its mobile camera module business, which has been identified as the main cause of the company's earnings volatility. As the iPhone is typically released in the second half of the year, the first half has been considered a low season for earnings, and the success of the iPhone has often determined the company's annual results.

Recently, however, LG Innotek has been ramping up its business in sensing components for autonomous vehicles and robots, thereby reducing its dependence on the mobile camera module segment. The company aims to overcome the seasonal skew towards stronger second-half performance by fundamentally improving its flagship optical solutions business.

Of note, LG Innotek has the unique advantage of being able to independently develop and manufacture all three core sensors for autonomous driving: cameras, LiDAR, and radar. Interoperability with software and compatibility between sensors are critical in autonomous driving, which is why automakers prefer a turnkey supply of these sensors from a single provider. Globally, only a handful of companies can offer all three sensor types as turnkey solutions with their own in-house technology, without outsourcing.

The company’s flexibility in tailoring solutions to suit each automaker's autonomous driving strategy is another competitive edge. LG Innotek provides customized solutions for customers who pursue a ‘vision-only’ approach to autonomy, as well as for those aiming to compensate for the limitations of cameras (for example, sensing issues caused by light reflection or severe weather) with the addition of LiDAR and radar technology.

Furthermore, LG Innotek continues to expand its technological lead over latecomers by launching proprietary innovations such as its ‘heating camera,’ which maintains sensing performance even in bad weather or dirty conditions, and its ‘active cleaning camera,’ which can remove water droplets from the lens in just two seconds.

Its longstanding technological credibility built up in the mobile camera module segment is also regarded as a significant reference. One industry insider stated, “Since the 2000s, LG Innotek has maintained its status as a core partner to Apple, so the company’s reputation in sensing technology will also have a positive impact on winning contracts in the vehicle sensing business.”

Semiconductor Substrates and Other Performance Stabilizers Lined Up

This expansion into autonomous vehicle and robot sensing is expected to ease LG Innotek’s earnings volatility. In the second quarter, LG Innotek’s non-mobile and automotive optics sales remained at around 139 billion won, indicating these areas are still in the early stages of growth. However, the company is now ramping up order-taking and aims to increase this revenue to as much as 2 trillion won annually by 2030. LG Innotek has already secured at least three key customers for its autonomous driving sensing business and is conducting active promotions targeting major domestic and international automakers.

Changes to Apple’s product release strategy also appear likely to accelerate LG Innotek’s transformation. Previously, sales would peak in the fourth quarter after third-quarter launches, with a sharp decline in the first half. Now, with Apple staggering its releases between premium models (second half) and standard models (first half), LG Innotek is expected to see a more stable mobile-related sales flow in the first half compared to before.

Product image of LG Innotek's RF-SiP substrate. LG Innotek

On top of that, the semiconductor substrate business has emerged as a new growth driver, fueled by rising demand for artificial intelligence (AI). The wireless RF-SiP packaging system holds the top global market share, and its reach is expanding beyond 5G to satellite communications, serving as a key cash cow for the company. Flip Chip Chip Scale Package (FC-CSP) for memory semiconductors is now running at full manufacturing capacity. For Flip Chip Ball Grid Array (FC-BGA), mass production for central processing units (CPUs) is set to commence in the second half, and new long-term agreement (LTA)-based customer contracts are expected to lead to a turnaround as early as next year.

As a result, operating profit in the package solution segment has risen sharply, from 36.8 billion won in the first half of 2023 and 51.4 billion won in the first half of last year, to 99.6 billion won in the first half of this year.

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