With the launch of the new smartphone iPhone 17 series on the horizon, there are expectations that the sales prices and market share of LG Innotek, which supplies camera modules, will recover. This is because the performance of the camera modules included in the premium lineup of the iPhone 17 series has greatly improved, which is likely to increase the sales price that had been reduced due to Apple's request for lower component costs. As the improvement in performance also raises manufacturing complexity, the supply volume from LG Innotek, which possesses superior technology compared to competitors, is expected to increase, gradually expanding its market share within Apple's camera module supply chain.
A camera module gathers light through a lens and transmits it to the image sensor, which converts the light into digital signals to produce images and other outputs. LG Innotek supplies a high-value camera module called Folded Zoom for Apple's premium products, including the iPhone Pro and Pro Max lineups. Folded Zoom is a zoom camera technology that refracts and disperses light using a prism to direct it to the image sensor. By bending light to secure the focal length, it implements a high-magnification zoom function while minimizing the 'camera bump' on the smartphone's rear due to the lens.
According to industry sources on the 3rd, LG Innotek's camera module sales prices, which had fallen more than 10% compared to the same period last year, are expected to recover in the second half of the year due to improved performance of the camera modules being implemented in new iPhones. It is reported that the pixel count of the telephoto lens in the camera modules of the iPhone 17 series Pro and Pro Max is set to increase from 12 million to 48 million. As manufacturing complexity rises, LG Innotek's market share, which was impacted by the entry of Chinese competitors into the supply chain, is also expected to recover.
LG Innotek is in urgent need of improving profitability to recover performance. The optical solutions division, which accounts for 80% of this year's first-half revenue, is struggling, which has impacted profitability. The optical solutions division responsible for camera modules recorded an operating loss of about 33 billion won in the second quarter, marking its first deficit in two years. In the second quarter, LG Innotek's operating profit was 11.4 billion won, a decrease of 92.48% compared to the same period last year (151.7 billion won).
According to LG Innotek's semi-annual report, the average selling price (ASP) of camera modules in the first half of the year dropped 13.6% compared to last year. Since 84% of LG Innotek's revenue comes from Apple, a decline in performance was inevitable. It has been analyzed that the pressure to lower component costs has resulted in a decrease in camera module prices.
An industry official noted, "Apple included Chinese corporations in its supply chain to reduce costs, prompting LG Innotek to lower camera module sales prices to defend its market share," adding, "Given that the sales proportion in the Chinese market is significant for Apple, it is likely they had no choice but to include components from Chinese corporations, considering the patriotic consumption tendencies of Chinese consumers."
Cho Hyun-ji, a researcher at DB Securities, stated, "Improvements in specifications centering around the Pro lineup of the iPhone are expected to continue driving the upward trend in average selling prices," and added, "With rising complexity in the module assembly process, LG Innotek's position within its customer base is forecasted to become even more solid."