LG Innotek, a leading manufacturer of camera modules and automotive electronic part, has selected the electronic materials and components business as its next-generation growth engine.
LG Innotek is now planning to nurture its electronic materials and components business into its next cash cow capable of raking in 200 billion won in annual sales within three years.
LG Innotek said on Jan.19 that it will launch into the metal power inductor and 2-metal chip-on-film (COF) business, two indispensable components of IT devices, including smartphones and TVs.
Behind LG Innotek’s announcement of its new business focus was Park Jong-seok, who has recently taken the helm of LG Innotek. CEO Park said: “To take LG Innotek, a manufacturer of cutting-edge materials and parts, to the next level, we must secure new growth engines.”
Thus, LG Innotek has rolled up its sleeves to make aggressive M&A moves and investment: it plans to plough approximately 70 billion won into fostering its electronic materials and components business by the end of this year.
The global electronic materials and components market, which has been mainly carved up among Japanese manufacturers, such as Murata and TDK, has proved to be very a lucrative sector promising an operating margin of 10-20 percent.
Preparing a business for setting foot in the sector and carrying out R&D activities is known to take 10 years or so. Hence the relevant industry views LG Innotek’s move as very ambitious and challenging.
Since LG Innotek already has key technologies for the production of electronic materials and components under its belt and has been briskly doing business with various corporate clients, LG Innotek is expected to make a soft landing in the sector at an earlier date.
Metal power inductors must be built into the internal circuits of smartphones, displays and cars to optimize electric current flows. Metal power inductors are designed to reduce malfunctions caused by an excessive electric current, thereby helping the digital device function in a sustainable manner. As metal power inductors are made from metallic magnetic materials, they are very durable and efficient.
Demand for metal power inductors is projected to pick up along with the trend towards miniaturization and slimming down of digital devices. As of now, a smartphone is equipped with 10-20 power inductors and more power inductors are built into a car.
And 2-metal COFs are used in connecting smartphone and TV display panels to the display driver integrated circuit (IC) and the main circuit board. They are suitable for high-resolution displays and mobile devices since microcircuits are printed on both sides of the film.
As LG Innotek, an electronics parts affiliate of LG Group, has already obtained core technologies needed for producing 2-metal COFs, such as tape substrates, HDI (High Density Interconnect) substrates and semiconductor substrates, those technologies will give LG Innotek a head start in the sector. As a matter of fact, LG Innotek is the world’s No.1 in the tape substrate sector.
LG Innotek, the world's leading smartphone camera module maker, saw its camera module business posting 2.2 trillion won in cumulative sales for the first 9 months of 2015.
On the automotive electric and electronic parts front, LG Innotek’s nearly 20 electric and electronic parts, including motors and sensors, have proved to be competitive products in the global market. Cumulative sales for the first 9 months of 2015 reached 470 billion won.
