LG Innotek's Cumulative Sales to Apple Top 14 Trillion Won... Substrate Profitability Also Soars

[Financial News] LG Innotek posted record-high cumulative sales to Apple in the first three quarters of this year, while also improving the profitability of its semiconductor substrate business. With more than 80% of its total revenue concentrated in Apple, the Package Solution business, which handles semiconductor substrates, is accounting for more than 20% of operating profit and broadening the company's profit base.
According to LG Innotek's quarterly report disclosed on the 13th, sales to a single customer accounting for at least 10% of revenue totaled 14 trillion 9.4 billion won from January through September this year. That was up 24.6% from 11 trillion 239.5 billion won in the same period last year. Given that cumulative sales in the first half totaled 8 trillion 841.5 billion won, the company brought in at least 5 trillion won more in the third quarter alone.
The customer is believed to be Apple. LG Innotek supplies Apple with key components for iPhones, including camera modules and substrates. The analysis is that the effect of launching new products in the second half, including the iPhone 18 series and Duo, came on top of steady demand for mobile camera modules in the first half.
As sales to Apple grew, customer concentration also became more apparent. The customer's share of total revenue rose 1.7 percentage points, from 78.7% in the first three quarters of last year to 80.4% in the same period this year. By business segment, Optical Solutions, whose main product is camera modules, generated 14 trillion 532.7 billion won in sales, accounting for 83.4% of the total.
While Apple and camera modules are driving growth in scale, Package Solution is making a growing contribution to profits. Cumulative sales for Package Solution in the first three quarters of this year rose 15.2% year on year to 1 trillion 417.4 billion won. Operating profit jumped 69.2%, from 80.2 billion won to 135.7 billion won, far outpacing sales growth. In just three quarters, it also surpassed last year's full-year operating profit of 128.9 billion won.
The operating margin rose 3.1 percentage points, from 6.5% in the same period last year to 9.6% this year. Package Solution accounted for 8.1% of total revenue but 21.3% of operating profit. In other words, it is becoming a business that contributes more to profits than its sales scale would suggest.
Growth in Package Solution has been driven in part by rising semiconductor demand amid the spread of artificial intelligence (AI). LG Innotek cited this as a factor behind Package Solution's sales growth in its quarterly report. In the first three quarters of this year, the average utilization rate for semiconductor substrates was 94.4%, higher than the rates for camera modules, at 81.7%, and tape substrates, at 65.1%.

[email protected] Park Ji-yeon Reporter