The forecast suggests that LG Innotek's supply volume related to Apple's new products may increase next year due to the United States' strengthened export regulations. This is because if President-elect Trump, who has expressed a tough stance on China, returns to power next year, Chinese competitors may face difficulties in supplying components.
According to the industry on the 17th, LG Innotek is expected to benefit from a reduction in the market share of Chinese corporations within Apple's supply chain following President Trump’s return to power. During the first term of the Trump administration in the past, export regulations on China caused a decline in the supply chain market share of LG Innotek's Chinese competitors.
Im Dong-joo, a researcher at SK Securities, noted, "Since 2018, LG Innotek's competitor O-Film and Sunny Optical have struggled significantly," adding, "If Trump's regulations on China are fully implemented, we expect a decline in the market share of camera vendors in Foxconn's Chinese factories and Luxshare Precision's group. There is a possibility that LG Innotek will repeatedly experience benefits from this situation."
This year, Apple diversified its supply chain for camera modules and actuators with the release of the iPhone 16 series. While the specifications of the parts improved, cost reduction was essential as the selling prices were frozen. Chinese Cowell Electronics supplied not only the front camera modules that were previously delivered but also high-value-added rear camera modules, while ICT partially supplied actuators that adjust the focus or compensate for shaking by moving the lens at high speed. As Chinese corporations entered the supply chain, LG Innotek's supply volume diminished, leading to a nearly 30% decrease in operating profit year-on-year, totaling 130.4 billion won in the third quarter.
Considering the patriotic consumption tendencies of Chinese consumers, there are analyses suggesting that Apple had no choice but to use parts manufactured by Chinese corporations. According to market research firm Counterpoint Research, Apple recorded a 64% share in the Chinese premium smartphone (over $600) market. Apple's sales revenue share in the Chinese market over the past two years has been around 20%.
In addition to existing suppliers, Chinese corporations are continuously seeking to provide components for LG Innotek's lineup. Guo Mingqi, a researcher at TF International, stated, "Chinese Sunny Optical is expected to supply camera modules for the Apple M5 MacBook, which will be released next year," adding that "if the supply goes smoothly, they may also supply camera modules for the next iPhone and iPad."
However, with Trump, who has vowed to strengthen regulations against China, returning to power, there are analyses suggesting that the supply of Apple-related components from Chinese corporations may face obstacles. An industry insider remarked, "One of the main reasons Apple uses components from Chinese corporations is the low price," and added, "If tariffs cause the import prices of components to rise, or if the U.S. government pressures the use of components from Chinese corporations, changes in Apple's supply chain policy will be inevitable."
A representative from LG Innotek stated, "We will continuously strengthen our competitiveness to defend our market share in camera modules, our core business area," adding that "to reduce reliance on specific business segments, we are focusing on fostering the automotive component business, where demand is expanding, and speeding up our restructuring efforts."
Currently, LG Innotek's automotive parts division supplies automotive motors, sensors, communication, and lighting solutions. Since this year, LG Innotek has also transferred and operated electronic component businesses, such as display power, to the automotive parts division. At the world's largest IT exhibition, CES 2025, held in early next year, LG Innotek plans to set up a booth focused solely on mobility for the first time.