LG Innotek will foster its semiconductor substrate business, which has emerged as a key component in the artificial intelligence (AI) era, as a future growth engine. Building on the technological competitiveness it has secured in the smartphone communications substrate market, the company will expand its business scope to high value-added substrates for memory and AI servers, with the goal of growing the package solution business to 1 trillion won in operating profit by 2031.
Cho Ji-tae, head of the Package Solution Business Division at LG Innotek (executive vice president), said at a media tech day held at the Magok headquarters in Gangseo-gu, Seoul, on the 16th, "We will rapidly expand our market share in the newly opening semiconductor substrate market based on differentiated technological prowess," adding, "By 2031, we will grow the package solution business into one that generates 1 trillion won in operating profit."
The package solution business is considered one of LG Innotek's representative high-margin businesses. Last year, package solution sales were 1.72 trillion won, up about 18% from 1.46 trillion won a year earlier. During the same period, operating profit rose 82% from 70.8 billion won to 128.9 billion won. While it accounts for about 10% of total sales, its share of operating profit reaches 19%.
LG Innotek unveiled three major semiconductor substrate products—RF-SiP, FC-CSP and FC-BGA—on the day. The company said demand for related substrates is rapidly increasing with the spread of 5G Network, the move to higher specifications in premium smartphones, the memory upcycle, and the growth of the AI and big data markets.
RF-SiP is a substrate used in communications semiconductor modules that bundle wireless communication components such as power amplifiers (PA) and chipsets into a single package. In 2011, LG Innotek became the first in the world to mass-produce coreless RF-SiP substrates and has since led the market by applying the copper post (Cu-Post) process for the first time in the industry. The company held about a 65% share of the global RF-SiP substrate market last year and expects that to expand to around 80% this year.
FC-CSP is a substrate used for packaging mobile application processors (AP) and memory semiconductors. As the AI market expands from training-centric AI to inference-centric and agentic AI, demand for high-performance memory is increasing, and accordingly, the application of FC-CSP is expanding beyond mobile APs into the memory sector.
Myung Se-ho, head of Package Solution Development at LG Innotek (senior vice president), said, "Compared with conventional memory substrates, FC-CSP substrates have superior electrical characteristics and high integration, which is advantageous for improving semiconductor performance," adding, "Replacing conventional memory substrates with FC-CSP is becoming an industry trend."
LG Innotek recently won orders for FC-CSP substrates for GDDR7 and plans to prioritize expanding RF-SiP and FC-CSP production capacity at its Vietnam semiconductor substrate plant, which will break ground this month, to meet growing demand.
The field the company has singled out as a future growth engine is FC-BGA. FC-BGA is a high-performance substrate for CPUs, GPUs, and AI accelerators used in PCs, AI servers, data centers and autonomous driving vehicles. It is up to 18 times larger in area than mobile FC-CSP and has 16 to 22 layers, making it more difficult to manufacture.
After announcing its entry into the FC-BGA business in 2022, LG Innotek built a dedicated production line, the Dream Factory, in Gumi. It is currently mass-producing FC-BGA for PC chipsets and plans to begin mass production of products for PC CPUs in the third quarter of this year. FC-BGA for server networks is under development with mass production targeted for the second half of this year, and FC-BGA for AI server CPUs, GPUs and AI accelerators is targeted for mass production in 2027.
Hwang Jung-ho, head of Package Solution Marketing at LG Innotek (senior vice president), said, "In the era of inference AI, not only GPUs but also CPUs and memory are expected to become even more important," adding, "In fact, a variety of global customers are visiting the company to discuss FC-BGA supply for CPUs."
While expanding RF-SiP and FC-CSP production capacity centered on the Vietnam plant, LG Innotek is also reviewing additional domestic and overseas investments to respond to increasing FC-BGA demand. The Vietnam plant will eventually produce RF-SiP, FC-CSP and FC-BGA.
The market outlook is also bright. According to market research firm Intel Market Research, the global FC-BGA market is expected to grow from $5.42 billion last year to $9.548 billion by 2032. The compound annual growth rate is 10.6%.
Executive Vice President Cho said, "We will continue developing FC-BGA applicable to various areas such as Edge Computing and defense and will actively work to secure new customers," adding, "We will grow the FC-BGA business into a core growth pillar for the company."