LG Innotek, South Korea’s leading camera module maker, has started the mass production of flip-chip ball-grid array substrates, the high-end chip substrates for servers and data centers, a highly lucrative but competitive field driven by advancements in artificial intelligence.
“We started production for a leading North American tech giant and are discussing (new deals) with other global clients,” CEO Moon Hyuk-soo told reporters Thursday on the sidelines of this week’s CES tech show in Las Vegas. “Currently, our priority is stabilizing the yield rate.”
The global FC-BGA market is expected to double from $8 billion in 2022 to $16.4 billion by 2030, according to Fujifilm Camera Research Institute. The market used to be dominated by rival Japanese and Taiwanese firms. More recently, Samsung Electro-Mechanics is fast catching up to secure sizeable deals with US tech firms.
“As a latecomer, our production capacity remains modest for now. We could discuss expanding output depending on new orders secured,” the CEO said, adding that it would take two to three years to reach full capacity. The company started production of FC-BGA substrates in December at its flagship plant in Gumi, North Gyeongsang Province, the same plant where it produces camera modules for Apple’s iPhones. The company aims to nurture the new business into a 1 trillion won ($6.8 billion) venture in the longer term.
Moon pointed to smart factory systems as the company’s competitive edge over rivals.
“We may face huge initial costs, but by implementing factory automation, we could greatly improve our operational efficiency,” he added.
In the third quarter of last year, the company posted 5.7 trillion won in sales, of which mobile camera modules and other optical solutions made up almost 70 to 80 percent.
The CEO remained cautious about the business impact of tariff threats from US President-elect Donald Trump on the company’s Mexico plant.
“When it comes to camera modules, European and American clients that relied on Chinese products are now increasingly switching to our products, possibly to reduce tariff risks. In order to meet this increased demand, the Mexico plant plays a key role,” he said.
“Even with an additional 25 percent tariff, Mexico is still a cheaper market to produce in than the US. We are closely monitoring the situation, focusing on maintaining our Mexico operations.”
yeeun@heraldcorp.com
