[Edaily Reporter Kim Hyung-il ] SKSecurities assessed that LG Innotek(011070)has not yet seen any changes in orders from major clients and expects price hikes for camera modules and expansion of its packaging substrate business. The analysis suggests that the stock price is nearing its bottom, as negative factors such as slowing smartphone demand and a weakening exchange rate have already been largely factored into the price.

On the 12th, Park Hyung-woo, an analyst at SKSecurities, stated, “During the non-deal roadshow (NDR) held following the third-quarter earnings announcement, no changes in orders from major clients were detected, and camera module prices have risen as expected,” adding He added, “In the packaging substrate division, negotiations for long-term supply agreements (LTAs) with three North American semiconductor companies are in the final stages, and the company is reviewing the scale and timing of investments for capacity expansion.”

However, the possibility of a slowdown in demand due to price increases for finished products—such as smartphones, laptops, and tablets—remains a concern. This is because price hikes for finished products—reflecting rising component costs—could lead to a decline in shipment volumes and a slowdown in component demand. In fact, it has been determined that competitors of our major clients have already seen quarterly shipment volumes decline by 5–30%. Although major clients initially planned to increase production by more than 5% next year, it is now deemed inevitable that demand for finished products will decline in the future.

The camera business is expected to maintain its medium- to long-term growth trend. LG Innotek stated that the average selling price (ASP) of the main camera in its flagship models for the second half of this year rose compared to the previous model and met expectations. Camera upgrades are expected to continue over the next five years, and selling price increases due to rising raw material costs are also anticipated. Given the high importance of high-end models, it was found that the top-tier models in the new product lineup saw significant changes compared to the previous year.

Packaging substrates are identified as a new growth driver. LG Innotek is conducting Long-Term Agreement (LTA) negotiations primarily with three North American semiconductor companies and is also in discussions with additional clients. However, SKSecurities noted that the existence of advance payment agreements and the actual timing of receipt are more important than the signing of LTAs themselves. This is because the size of advance payments and the timing of their receipt could determine future investment resources and the stability of the company’s medium- to long-term financial structure.

The company is also reviewing plans for capacity expansion. Large-scale investments are expected from this year through 2028, and the company is considering a capital expenditure model based on investment support from customers. The 2030 target for the packaging substrate business is 4 trillion won in revenue, with 2 trillion won each from flip-chip ball grid array (FC-BGA) and bismaleimide triazine (BT) substrates, and 1 trillion won in operating profit. In the FC-BGA sector, following existing supplies to North American fabless companies, the company successfully began supplying a global CPU manufacturer this year and expects to begin full-scale supply of substrates for server CPUs in 2029.

The mobility business is also securing a solid order base. LG Innotek’s new orders rose from 3.8 trillion won in 2023 to 5.1 trillion won in 2024, reached 4.8 trillion won last year, and are projected to reach 4 trillion won this year. The company is currently securing orders for new products such as AP modules, and its cumulative order backlog is expected to exceed 20 trillion won by the end of this year, up from 19.2 trillion won last year. In the robotics sector, LG Innotek is pursuing a business involving humanoid hand modules utilizing actuator and motor technologies for a North American robotics specialist, Daesang.

Research Analyst Park stated, “Most negative factors—such as exchange rates, concerns over Chonbang smartphone demand, and downward revisions to earnings estimates—have already been priced in, and the stock price has already declined significantly.” He added, “Considering the trend toward camera upgrades and the company’s commitment to expanding packaging substrate production capacity, the current price—which is down 81% from its peak—presents a good opportunity to consider buying.”