LG Innotek Still Heavily Reliant on Apple, but Shows Signs of Shifting Toward Substrate Business

According to The Financial News, LG Innotek's semiconductor substrate business grew rapidly last year, signaling a potential shift in the company’s business portfolio. The Apple-focused camera module business still accounts for an overwhelming share of total revenue, but analysts expect the company to accelerate a structural shift this year toward high-value-added substrate operations on the back of a semiconductor boom.
According to LG Innotek's audit report released on the 9th, the Package Solutions Business Division, which produces semiconductor substrates and related products, posted sales of 1.7198 trillion won last year. This represents a 17.8% increase from 1.4598 trillion won a year earlier and was the fastest growth among LG Innotek’s business divisions: Optical Solutions, Package Solutions, and Mobility Solutions.
The change is also clear when looking at the share of total revenue. Last year, the Package Solutions Business Division accounted for 7.9% of total sales, up 0.9 percentage points from 7.0% the previous year. It was the only division whose share of total revenue increased, underscoring how strongly the substrate business outpaced other operations within the company.
Industry observers say LG Innotek’s efforts to reshape its business structure are becoming more visible. At CES in January, CEO Moon Hyuk-soo stated, "LG Innotek is no longer just a simple parts manufacturer, but a solutions company," adding, "We will push hard to reorganize our portfolio around high-profit, high-value-added businesses."
This stance is widely seen as a response to the company’s heavy dependence on a single customer, Apple Inc. Because of this reliance, LG Innotek’s performance is highly exposed to Apple’s pricing policies and fluctuations in smartphone demand.
In fact, the Optical Solutions Business Division, which supplies camera modules and related products, generated 18.3314 trillion won in sales last year, accounting for 84.9% of LG Innotek’s total annual revenue of 21.596 trillion won. Although this is slightly down from 85.3% in 2024, the division still overwhelmingly dominates the company’s portfolio.
Most of the camera modules supplied by LG Innotek are known to go into Apple products, with only a small portion used in vehicles. The expansion of camera module sales last year is also believed to have been driven largely by strong demand for Apple’s iPhone 17 series.
However, with the semiconductor market expected to boom this year on the back of Artificial Intelligence (AI), the industry anticipates improved demand and profitability for substrates. As a result, many expect LG Innotek’s portfolio shift to accelerate further.
Last year, growth in LG Innotek’s substrate business was largely fueled by increased demand for mobile products such as smartphones. This year, sales are also expected to benefit in earnest from demand for advanced substrates such as flip-chip ball grid array (FC-BGA), which are used in AI server central processing units (CPUs) and graphics processing units (GPUs).
An industry official commented, "This year, thanks to the semiconductor boom, high-value-added substrate sales are expected to be fully reflected in LG Innotek’s results," adding, "Mobile-oriented substrates are also likely to maintain stable profitability, supported by a portfolio focused on premium products."
one1@fnnews.com Jung Won-il Reporter