LG Innotek posted an operating profit of 295.3 billion won in the first quarter, far exceeding the market's initial consensus. It marks a complete break from the past, when results swung with the sales scale of camera modules for Apple iPhones. With the artificial intelligence (AI) boom, the high-performance semiconductor-based business has taken hold as another main pillar for the company, leading to solid performance even in the seasonal off-peak period.
On the 27th, LG Innotek reported an operating profit of 295.3 billion won, beating the one-month consensus (the average of financial institutions' estimates) of 236.9 billion won. Revenue came to 5.5348 trillion won. Revenue and operating profit rose 11% and 136%, respectively, from a year earlier.
Despite the seasonal off-peak, steady demand for mobile camera modules continued, and strong demand for the high-performance semiconductor substrate business supported solid results. In addition, mobility components such as vehicle cameras and lighting modules steadily grew, contributing to revenue expansion.
LG Innotek had long been seen as overly dependent on its optical solutions business. Because camera modules for premium smartphones accounted for most of its revenue, quarterly results were heavily influenced by major customers' shipment volumes and new product launch schedules. But as the AI Semiconductor market expands, demand for high-value package substrates is increasing, and the substrate materials business is contributing more profit, accelerating a fundamental shift in the business structure.
In particular, AI Semiconductor substrates are considered a product group with higher technical difficulty and relatively better profitability than general mobile components. As demand grows for AI server semiconductors and high-performance compute chips, the importance of substrates that enhance the electrical performance and integration density of semiconductor packages is also rising. For LG Innotek, this is an area that allows a shift away from camera module–led top-line growth to a portfolio focused on profitability.
In fact, in the first quarter, LG Innotek's Package Solutions Business posted revenue of 437.1 billion won, up 16% from a year earlier. Despite the off-peak season, supply of high-value communication semiconductor substrates such as RF-SiP (radio frequency system-in-package) performed well, while continued expansion of flip chip chip package (FC-CSP) supply for new applications including high-performance memory drove revenue growth. The flip chip ball grid array (FC-BGA) business, a high-spec semiconductor–based operation, is also seeing gradual revenue increases, centered on PC products.
The Mobility Solutions Business recorded revenue of 487.1 billion won, up 4.2% from a year earlier. Led by high-value vehicle lighting modules, it is maintaining a growth trajectory. With an order backlog of 19.2 trillion won as of the end of last year, the Mobility Solutions Division plans to aggressively expand new orders this year, led by Autonomous Driving solutions. Earlier, in March, Moon Hyuk-soo said, "With revenue from in-vehicle AP modules starting in earnest from the fourth quarter, the Mobility Solutions Business will continue its growth trend."
Meanwhile, industry watchers say LG Innotek's performance this year will hinge on the growth of AI Semiconductor substrates and the second-half smartphone new product cycle. While camera modules remain a key revenue source, AI Semiconductor substrates have begun to play a role in protecting profit, increasing the likelihood that the market's view of LG Innotek's business structure will change.