[Edaily Reporter Kim Kyung-eun ] On the 26th, KB Securities maintained its “Buy” rating and target price of 2 million won for LG Innotek(011070), citing expectations of positive earnings surprises for two consecutive quarters.

Kim Dong-won, Head of Research at KB Securities, stated in a report released that day, “Currently, the artificial intelligence (AI) board market is moving in tandem with the memory semiconductor cycle,” adding, “If synchronization with semiconductor stock prices gains momentum in the future, LG Innotek is likely to be reevaluated as a growth stock; therefore, we believe earnings surprises are just beginning.”

The firm projected that LG Innotek’s second-quarter consolidated operating profit would reach 202.8 billion won, a 1,680% increase year-over-year, exceeding the market consensus (152.6 billion won) by 33%. This indicates that an earnings surprise is expected for the second consecutive quarter, following the first quarter.

The firm also believes that the company could achieve its best-ever performance in the second half of the year for the first time in five years. Operating profit for the second half is projected to reach 8066억 won, surpassing the figure for the second half of 2021 (7655억 won). With the utilization rate at the AI semiconductor substrate plant approaching 100%, selling prices are expected to continue rising, and the selling prices of new optical solution products are also forecast to increase significantly year-over-year.

In particular, the company anticipates that the benefits of expanding production capacity for server-grade flip-chip ball grid array (FC-BGA) will begin to take full effect. LG Innotek’s FC-BGA revenue is estimated to grow from 1400억 won this year to 1조1000억 won in 2028 and 2조3000억 won in 2030. This represents an eightfold increase in two years and a 16-fold increase in four years.

“Over the past 25 years since 2000, LG Innotek’s highest operating profit was 1.27 trillion won, recorded in 2022,” said Division Head Kim, “However, operating profit in 2026 is estimated to reach 1.3 trillion won—a 96% increase from the previous year—and 1.6 trillion won in 2027, indicating that the company is expected to set new record highs for two consecutive years,” he predicted.

He continued, “This is because, while shipments of optical solutions are expected to set new annual records, demand for high-performance AI substrates from data center providers is increasing, and a shortage of AI semiconductors is projected to intensify.” He added, “In particular, demand for high-performance CSP substrates is expected to grow in tandem with next-generation AI platforms—such as SOCAMM2 and GDDR7—to be incorporated into NVIDIA’s Vera Rubin and Rubin CPX, scheduled for release in the second half of the year.” He also noted, “Opportunities for supplying communication boards are expected to expand in the aerospace sector as well, including Amazon’s Kuiper Project—its geostationary satellite initiative—and SpaceX’s Starlink.”