LG Innotek to invest W1.4tr to beef up production

LG Innotek said Wednesday that it is investing a total of 1.4 trillion won ($1.07 billion) into its local production facilities by 2023 to beef up the production of circuit substrates and camera modules – its key growth drivers.

The company signed a memorandum of understanding for the new investment with the local governments of North Gyeongsang Province and its capital city, Gumi, earlier in the day.

The new funding will be used to expand its production facilities in the city, including the acquisition of a new fifth plant on a 230,000 square-meter site that will produce FC-BGA or flip chip ball grid array substrates from next year.

Last February, LG Innotek announced its official entry into the burgeoning FC-BGA market as a future growth driver. FC-BGA is a high-performance, high-density semiconductor packing solution that connects chips and substrates for high-end processors used in PCs, servers and networks.

Amid a recent surge in demand, the FC-BGA substrates are in short supply due to their tricky production.

LG Innotek, the world‘s No. 1 producer of RF-SiP, or radio frequency system-in-package, showed confidence in securing an edge in the FC-BGA sector, citing similar production processes.

The camera module is also a key source of revenue for the company. Its Optical Solution unit posted 11.8 trillion won in sales last year, a 68 percent surge compared to the year before. Since 2011, the company has maintained its No. 1 position in the smartphone camera module market.

With the upcoming addition, the company will soon operate five plants in Gumi on a 370,000 square-meter site equivalent to the size of 52 soccer fields.

“The latest investment will be an opportunity for LG Innotek, the local economy and suppliers to seek shared growth,” said LG Innotek CEO Jeong Cheol-dong during the MOU signing event held at the city hall. “We will continue spending to innovate our customer’s experience.”

By Lee Ji-yoon (jylee@heraldcorp.com)