KB Securities on the 15th said demand for iPhone parts will rise on the spread of artificial intelligence (AI) smartphones and that high growth in substrates for AI Semiconductor chips will begin in earnest for LG Innotek. It maintained a Buy rating and a target price of 2 million won. The previous trading day's closing price of LG Innotek was 1,036,000 won.
Kim Dong-Won, head of research at KB Securities, said, "From 2026 to 2028, LG Innotek is expected to be the biggest beneficiary of the expansion of the AI Siri ecosystem driven by changes in iPhone strategy," and added, "LG Innotek, which has advanced optical technology, will enjoy both market share gains and higher average selling prices (ASP)."
In particular, it projected that a higher shipment mix of iPhone Pro and above will lead to growth in the optical solutions business. It said Apple's push for an aggressive market share strategy to expand the AI agent ecosystem will increase demand for high-value parts such as camera modules.
The substrate business for AI Semiconductor chips was also cited as a new growth driver. The analyst said, "AI Semiconductor substrates for SOCAMM2 and GDDR7, which have shifted to a supplier-led market, along with server FC-BGA substrates, are emerging as key pillars for medium- to long-term earnings improvement."
In particular, it saw earnings rising under long-term agreements (LTA). The analyst said, "Major U.S. clients are providing capex support and signing LTAs," and added, "We are also pursuing new capacity additions for server FC-BGA at the request of more than four large U.S. clients."
Accordingly, the head of research forecast LG Innotek's operating profit this year at 1.3 trillion won, up 96% from a year earlier. It also projected 2027 operating profit at 1.6 trillion won. Second-quarter operating profit is seen at 202.8 billion won, up 18 times from a year earlier, beating the market consensus of 146 billion won.
The analyst said, "The optical solutions and package solutions businesses are being reappraised as core component businesses for the AI infrastructure ecosystem, and iPhone optical solutions shipments continue to exceed market expectations," adding, "This signals a structural shift in earnings power beyond short-term improvements."