New offerings: Crowds near the LG booth at the Consumer Electronics Show in Las Vegas. LG Innotek says it will take two to three years to reach full capacity for production of its FC-BGA product.— AP
Seoul: LG Innotek, South Korea’s leading camera module maker, has started the mass production of flip-chip ball-grid array (FC-BGA) substrates, the high-end chip substrates for servers and data centres, a highly lucrative but competitive field driven by advancements in artificial intelligence.
“We started production for a leading North American tech giant and are discussing (new deals) with other global clients,” chief executive officer Moon Hyuk-soo told reporters last Thursday on the sidelines of the Consumer Electronics Show exhibition in Las Vegas.
“Currently, our priority is stabilising the yield rate,” Moon said.
The global FC-BGA market is expected to double from US$8bil in 2022 to US$16.4bil by 2030, according to Fujifilm Camera Research Institute.
The market used to be dominated by rival Japanese and Taiwanese firms.
More recently, Samsung Electro-Mechanics is fast catching up to secure sizeable deals with US tech firms.
“As a latecomer, our production capacity remains modest for now. We could discuss expanding output depending on new orders secured,” the chief executive said, adding that it would take two to three years to reach full capacity.
The company started production of FC-BGA substrates in December at its flagship plant in Gumi, North Gyeongsang Province, the same plant where it produces camera modules for Apple’s iPhones.
The company aims to nurture the new business into a one trillion won or about US$6.8bil venture in the longer term.
Moon pointed to smart-factory systems as the company’s competitive edge over rivals.
“We may face huge initial costs, but by implementing factory automation, we could greatly improve our operational efficiency,” he added.
In the third quarter of last year, the company posted 5.7 trillion won in sales, of which mobile camera modules and other optical solutions made up almost 80%.
The chief executive remained cautious about the business impact of tariff threats from US President-elect Donald Trump on the company’s Mexico plant.
“When it comes to camera modules, European and American clients that relied on Chinese products are now increasingly switching to our products, possibly to reduce tariff risks. In order to meet this increased demand, the Mexico plant plays a key role,” he said.
“Even with an additional 25% tariff, Mexico is still a cheaper market to produce in than the United States. We are closely monitoring the situation, focusing on maintaining our Mexico operations.” — The Korea Herald/ANN
