'Beyond Mobile to Robotics': LG Innotek Continues Portfolio Expansion [KFT Topic]

[Korea Financial Times, Gwak Horyung] LG Innotek is expected to deliver improved performance driven by a rebound in optical solutions boosted by the Apple effect, along with high-margin businesses such as substrates and automotive components. The company is also accelerating portfolio diversification centered on future growth drivers, including vision sensing for robots.

LG Innotek recorded revenue of KRW 14,286.8 billion and operating profit of KRW 340.3 billion in the first three quarters of last year. These figures decreased by 2% and 25.7%, respectively, compared to the same period the previous year.

The decline in profitability was due to the weak first-half performance of the Optical Solutions division, which accounts for 82% of total revenue. Through the third quarter of last year, this division's operating profit dropped 45.3% to KRW 201.7 billion (operating margin of 1.7%).

Nevertheless, the Optical Solutions division is expected to show significant year-over-year improvement based on strong fourth-quarter performance. This is attributed to the continued positive effects from robust sales of Apple's iPhone 17, a key customer for the company's high-performance camera modules. Hana Securities, which recently published a corporate analysis report on LG Innotek, cited this as the basis for raising its fourth-quarter operating profit estimate by more than 30% to KRW 354.3 billion.

The Substrate division, covering semiconductors and displays, and the Automotive Components division—both being cultivated as new growth engines by LG Innotek—are also experiencing rapid growth. Through the third quarter of last year, the Substrate division's cumulative operating profit increased 65% year-over-year to KRW 80.2 billion (operating margin of 6.5%). Despite declining revenue due to weak electric vehicle demand, the Automotive Components division recorded operating profit of KRW 58.4 billion (operating margin of 4.2%), a 42% increase, centered on high-value-added products such as automotive lighting.

The business environment facing LG Innotek this year is challenging. Market research firms forecast negative growth in smartphone demand due to the global economic recession and surging memory prices. For substrates, despite the "semiconductor super cycle," the company is reportedly unable to properly pass on the sharp rise in raw material prices for copper and gold to selling prices.

To overcome this situation, LG Innotek is continuously exploring new markets. A representative market is robotics. In May last year, the company signed an agreement with Boston Dynamics, Hyundai Motor Group's robotics subsidiary, to jointly develop vision sensing modules that serve as the "eyes of robots." Vision sensing modules are systems that integrate cameras and sensors. They are expected to enable more three-dimensional perception of objects captured by cameras.

LG Innotek is led by CEO Moon Hyuk-soo, an engineer by background. Moon, who officially assumed the CEO position in 2024, was promoted from executive vice president to president last year, receiving recognition for his portfolio diversification achievements.

In his New Year's address this year, CEO Moon emphasized, "Let's become a trusted technology partner that realizes our customers' vision together," adding, "We will expand our business into various areas including mobility and robotics to open new business opportunities."

Gwak Horyung (horr@fntimes.com)