The Automotive Application Processor (AP) Module is a new electronic component for vehicles developed by LG Innotek. (Image courtesy of LG Innotek)
SEOUL, March 10 (Korea Bizwire) — Leading South Korean electronics component manufacturers are bouncing back from the global IT slowdown by focusing on high-value products driven by artificial intelligence (AI) technology. LG Innotek and Samsung Electro-Mechanics, which achieved record sales last year despite profitability challenges, are now poised for a significant turnaround.
According to market consensus compiled by Yonhap Infomax, LG Innotek is expected to report an operating profit of 98.6 billion won in the first quarter of 2025. While this represents a 43.9% decrease from the 176 billion won reported in the same period last year, analysts are increasingly optimistic about the company’s prospects.
Daishin Securities forecasts LG Innotek’s Q1 operating profit could reach 131.8 billion won, significantly exceeding market expectations. 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 high-end camera modules from LG Innotek. Beyond its established relationship with Apple, the company is expanding its automotive components business, focusing on autonomous driving technologies including sensing, communication, and lighting systems.
LG Innotek has also begun mass production of FC-BGA (flip chip ball grid array) substrates for high-performance computing, with recent supply agreements secured with major global tech companies. Analyst Park Kang-ho of Daishin Securities notes, “We expect 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 report strong first-quarter results, with consensus forecasting operating profits of 197.8 billion won, up 10% year-on-year and 72% quarter-on-quarter. The company’s annual operating profit is expected to reach 735 billion won, marking a 24.5% increase from last year.
Samsung Electro-Mechanics stands to benefit from China’s consumer stimulus program, which is expected to boost smartphone and tablet PC sales. The company is strengthening its high-value product lineup, including MLCCs (multilayer ceramic capacitors) for AI servers and automotive applications, package substrates, and camera modules.
Mirae Asset Securities projects that Samsung Electro-Mechanics’ MLCC facility utilization rates will progressively increase from 83% in Q1 to 90% in Q3, driven by growing demand from AI servers. The company also plans to begin mass production of FC-BGA for AI accelerators within the 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.”
Kevin Lee (kevinlee@koreabizwire.com)
