South Korean electronics component manufacturers are recovering from the global IT slowdown by focusing on high-value products powered by artificial intelligence (AI) technology, as reported in an article published by Korea Bizwire.
LG Innotek and Samsung Electro-Mechanics, despite facing profitability challenges last year and achieving record sales, are now poised for a substantial turnaround.
Market consensus compiled by Yonhap Infomax predicts LG Innotek’s Q1 2025 operating profit to be 98.6 billion won, a 43.9% decline from the same period last year. However, analysts are increasingly optimistic about the company’s prospects.
Daishin Securities forecasts LG Innotek’s Q1 operating profit to surpass market expectations, reaching 131.8 billion won. The securities firm has also raised its annual operating profit forecast by 8.1% to 740.5 billion won, representing a 4.9% increase from last year.
This positive outlook is partly driven by strong sales of Apple’s iPhone 16 Pro and Pro Max models, which feature LG Innotek’s high-end camera modules. Beyond its established partnership with Apple, the company is expanding its automotive components business, focusing on autonomous driving technologies such as sensing, communication, and lighting systems.
LG Innotek has also commenced mass production of FC-BGA (flip chip ball grid array) substrates for high-performance computing, securing recent supply agreements with prominent global tech companies. Analyst Park Kang-ho of Daishin Securities anticipates increased sales of FC-BGA, particularly for CPU and AI semiconductors, in the second half of the year, with potential high-value product supply to Intel.
Similarly, Samsung Electro-Mechanics is expected to deliver robust first-quarter results, with consensus forecasting operating profits of 197.8 billion won, a 10% year-on-year and 72% quarter-on-quarter increase. The company’s annual operating profit is projected to reach 735 billion won, representing a 24.5% rise from last year.
Samsung Electro-Mechanics, a subsidiary of Samsung, is poised to capitalize on China’s consumer stimulus program, which is anticipated to stimulate sales of smartphones and tablet PCs. To capitalize on this opportunity, the company is bolstering its product portfolio with high-value offerings, including multilayer ceramic capacitors (MLCCs) for AI servers and automotive applications, package substrates, and camera modules.
Mirae Asset Securities projects a steady increase in the utilization rate of Samsung Electro-Mechanics’ MLCC facility, from 83% in Q1 to 90% in Q3, driven by the surging demand for MLCCs in AI servers. Additionally, the company plans to commence mass production of FC-BGA (Flat-Chip Ball Grid Array) for AI accelerators within the coming year.
“Samsung Electro-Mechanics continues to increase its proportion of high-value products, leveraging its capability to meet server and automotive sector demands directly related to AI,” said Park Hee-chul, an analyst at Heungkuk Securities. “We expect steady growth in high-end FC-BGA demand and significant revenue contribution from AI accelerator-related products starting this year.”
