LG Innotek, the LG Group affiliate that is Korea's largest camera-module maker and one of its two major semiconductor-substrate suppliers, plans to invest more than ₩2 trillion ($1.46 billion) through the end of 2027 to scale its AI semiconductor-substrate business, according to Maeil Business Newspaper, a Korean business daily. The disclosure landed days after the company signed a June 4 memorandum of understanding with Haiphong City, Vietnam, to build out a substrate plant there.
How big is this relative to the business it feeds?
The number only makes sense against the size of the unit receiving it. LG Innotek's Package Solution division — the segment that houses its substrate operations — booked ₩1.72 trillion ($1.26 billion) of revenue in 2025, up 18% year over year, and is guided to roughly ₩1.88 trillion ($1.37 billion) in 2026, per figures reported by The Korea Herald (March 13, 2026). A capex commitment exceeding ₩2 trillion therefore lands above a single year of that division's entire revenue — a sizing that frames this as a multi-year bet on the segment becoming a structural pillar rather than a bolt-on.
The division already punches above its weight on profit. The Korea Herald reported its 2025 operating profit rose 82% to ₩128.9 billion ($94 million); although the unit accounted for just 7.9% of company sales, it generated 19.4% of operating profit. That margin gap is the commercial logic for pouring capital in.
What is actually driving it: lines running flat out
The trigger is capacity exhaustion. Utilization at LG Innotek's substrate plant in Gumi, its domestic production base in southeastern Korea, climbed from 80.8% at the end of 2025 to 91.8% in the first quarter of 2026 — "effectively operating at full capacity" — as AI data-center buildouts lifted substrate demand, according to Seoul Economic Daily (June 4, 2026). That utilization has stepped up steadily from 63.2% in 2023 and 75.6% in 2024, per The Korea Herald, leaving little headroom to absorb new orders without new floor space.
What the money buys
Under the Haiphong MOU, construction is scheduled to begin in July 2026 and finish by May 2027, on a site of roughly 330,000 square meters (about 98,000 pyeong), per Seoul Economic Daily and The Asia Business Daily (June 4, 2026). The Vietnam plant will manufacture RF-SiP (radio-frequency system-in-package), FC-CSP (flip-chip chip-scale package) and FC-BGA (flip-chip ball-grid-array) substrates. Under a dual-site split the company described, Gumi becomes the "mother factory" for new technology and high-value products, while Vietnam runs as a mass-production base for general-purpose substrates. The Asia Business Daily reports the broader aim is to grow the package-solution business to more than ₩3 trillion ($2.19 billion) in annual sales by 2030.
Note that LG Innotek has not officially confirmed a fixed investment figure for the Vietnam plant specifically; the English-language coverage on the MOU describes the amount as not yet finalized. The "over ₩2 trillion" figure traces to Maeil Business Newspaper's reporting on the company's broader substrate push through 2027.
What the market may be underpricing — and the incumbent wall
The strategic appeal is that high-end FC-BGA substrate is one of the few AI-supply-chain links still running short. But LG Innotek is a late entrant attacking an entrenched field: it only began mass-producing FC-BGA in early 2024, and five incumbents — Japan's Ibiden and Shinko Electric, Taiwan's Unimicron and Nan Ya PCB, and Austria's AT&S — together hold roughly 74% of the global FC-BGA market, according to Intel Market Research data cited in coverage of the segment. LG Innotek's wedge has been chipset and CPU substrate segments where supply is thinner.
Sell-side reaction has turned more constructive. Meritz Securities, a Korean brokerage, on June 11 raised its target price on LG Innotek to ₩1.4 million ($1,022) from ₩1.3 million ($949) and kept a buy rating, narrowing the discount it applies from 20% to 10% to reflect "the relatively steep growth in ABF substrate sales" expected from early entry into the expansion cycle, analyst Yang Seung-su wrote, per The Asia Business Daily.
The open question
For a late entrant building commodity capacity in Vietnam while reserving the high-margin work for Gumi, the test is whether substrate revenue keeps compounding fast enough to justify capex above a full year of segment sales. The next concrete checkpoint is LG Innotek's Q2 2026 results, where the Gumi utilization rate — already at 91.8% — and Package Solution revenue versus the ₩1.88 trillion full-year guide will signal whether AI-driven substrate demand is still outrunning the company's ability to supply it.
This article is for informational purposes only and does not constitute investment advice. Figures are sourced from the outlets cited inline; currency conversions use an approximate rate of 1 USD = 1,370 KRW. Readers should conduct their own research before making any investment decision.
Sources: https://www.mk.co.kr/news/business/12070855, https://view.asiae.co.kr/article/2026061016150966695, https://www.asiae.co.kr/en/article/2026060415025759218, https://en.sedaily.com/news/2026/06/04/lg-innotek-to-expand-chip-substrate-capacity-in-vietnam, https://www.koreaherald.com/article/10693624
