LG InnoTek to benefit from O'Film's absence
LG InnoTek’s optical solution business, which manufactures camera modules for Apple, has increased its spending this year.
The company said on Thursday that the business was spending 547.8 billion won to secure and strengthen its competence.
LG InnoTek had announced its spending for the optical solution business near the year’s start every year.
In 2019, the business’ spending was 282.1 billion won and in 2020 it was 479.8 billion won.
This year’s spending is a 14% increase from 2020. The increase is likely due to Apple’s changes to its camera module supply chain. Cupertino now has two camera module suppliers, down from the previous three.
China’s O’Film was kicked out of Apple’s supply chain due to allegations against it in taking part in human rights violations of the Uighur people. O’Film’s supply volume has been given to LG InnoTek and Sharp.
LG InnoTek has mostly supplied camera modules for higher-tier iPhone models up to now, but it will also be supplying them for lower-tier models as well going forward. The South Korea component maker previous had around 50% market share within Apple’s camera module supply chain, but this is expected to go up to mid to late-50%. Sharp’s is also expected to increase from mid-30% to 40%. O’Film had a share of late-10% before it was kicked out of the supply chain.
Three models out of the four expected in the iPhone series launching later this year is expected to have new sensor shift technology. The technology uses image sensor for image stabilization instead of the lens. Last year, only iPhone 12 Pro Max had the technology. LG InnoTek’s latest spending increase likely stems from Apple’s expanded use of the technology for iPhone models.
Starting this year, Apple is planning to have Foxconn due the final assembly process for camera modules. Previously, companies like LG InnoTek manufactured single cameras, then assembled them into multi cameras before supplying them to Foxconn.
This will be a loss of revenue for LG InnoTek but the increased supply volume and unit price increase from adding sensor shift will likely make up for it. The optical solution business posted sales of 6.77 trillion won last year, an increase of 24% from 2019. This year, the business is expected to post sales of 7.4 trillion won, according to South Korean analysts.