LG Innotek is increasing its facility investment once again. After the first-half investment amount turned positive for the first time in four years, the company has also begun expanding production capacity for automotive AP (application processor) modules and semiconductor substrates.
According to LG Innotek's semi-annual report released on the 9th, the company's total investment amount for the first half of this year reached 331.9 billion won, a 20% increase compared to the same period last year (275.6 billion won). The first-half investment amount had declined annually since reaching 1.0634 trillion won in 2022, marking its first rebound this year.
Investments are targeting both new businesses and core operations simultaneously. In January, LG Innotek signed a 100 billion won investment agreement with Gwangju City to expand an automotive AP module production line. Following the announcement of business entry last year, the company began supplying products to global semiconductor companies from the end of last year. LG Innotek plans to secure additional customers by expanding production capacity and develop the automotive AP module business as a new growth engine for its mobility solutions business.
The company is also responding to increased demand for its core business, semiconductor substrates. The first-half production line utilization rate rose 18.8 percentage points year-on-year to reach 94%, approaching maximum operational capacity. In June, LG Innotek signed a factory expansion investment agreement worth approximately 10 billion dollars (1.42 trillion won) with Hai Phong City, Vietnam. The facility is scheduled for completion in May 2027 and will produce RF-SiP (radio frequency system-in-package), FC-CSP (flip-chip chip-scale package), and FC-BGA (flip-chip ball grid array). Separately, the company is also considering additional investments both domestically and internationally.
The company has also secured financial capacity to support expanded investment. The debt ratio decreased from 107% at the end of last year to 87% by the end of the first half this year, while cash and cash equivalents reached 1.2 trillion won. Operating cash flow also exceeded 1 trillion won for three consecutive years, totaling 1.3 trillion won last year.
Cho Dae-hyung, a research analyst at DS Securities, stated, "Not only RF-SiP and FC-CSP, but the timing of profit contribution from FC-BGA will also be accelerated." He added, "Although FC-BGA is a relatively late entrant, supply discussions are rapidly expanding amid tight supply-demand conditions."
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