Korea’s LG Innotek to invest $997mn in camera module plant in Vietnam

[Courtesy of LG Innotek]

LG Innotek Co., an information technology component unit of South Korea’s LG Group, will invest 1.3 trillion won ($997 million) in its production facility in Haiphong, Vietnam, to double output capacity, as part of its two-track strategy of strengthening production capacity for entry-level products at its forward base in Vietnam and focusing on high-value products in Korea.

LG Innotek established the Haiphong entity in September 2016. Its facility started producing camera modules in September in the following year and surpassed 1 trillion won ($766.86 million) in sales a year after. As demand for camera modules from customers like Apple Inc. surged, the company invested an additional $140 million to expand the facility in 2018 after four months of operation.

Since then, the Haiphong facility has grown, posting sales of 4.35 trillion won and a net profit of 145.9 billion won last year. The facility is the largest among LG Innotek‘s overseas entities, with some 3,500 employees.

With the latest investment, LG Innotek aims to further strengthen its production capacity for smartphone camera modules.

The new factory is expected to be completed in the second half of 2024 and begin operations in 2025.

The city of Haiphong also welcomed the investment and pledged various support measures, including the installation of additional substations to expand electricity and tax incentives.

Industry insiders believe that the expansion is driven by the company’s judgement that the smartphone market will continue to grow.

According to Taiwan-based market research firm TrendForce, the production volume of smartphone camera modules is expected to reach 4.62 billion units this year, up 3.6 percent from last year’s production of 4.46 billion units.

The increase in camera module production is in line with a rebound in smartphone demand.

Global market research firm IDC analyzed that the global smartphone market is expected to grow at an annual rate of 2.6 percent over the next five years, starting in the second half of this year.

LG Innotek plans to concentrate on entry-level models at its Vietnam facilities while produce premium products at its domestic facilities, such as in Gumi.

In June last year, LG Innotek acquired LG Electronics Inc.’s A3 factory in Gumi after the electronics giant decided to fold its solar panel business. LG Electronics produced solar panels from the A3 factory.

At the time, LG Innotek announced a plan to invest 1.4 trillion won in the factory by this year.

In December last year, LG Innotek signed a contract to lease part of LG Display Co.’s C7 plant in Paju to use it as a production base to strengthen its premium product line, three dimensional (3D) Time of Flight (ToF) sensing modules.

ToF is a 3D recognition technology that calculates depth by measuring the time it takes for a light beam to bounce back from an object, enabling distance and space to be measured together. It is considered a key technology used in virtual reality (VR), augmented reality (AR), and metaverse devices.

In the meantime, LG Innotek has been gaining increased demand for its products, as it is known to be the sole supplier of folded zoom camera modules Apple plans to apply them to its iPhone 15 Pro Max to be released this fall. LG Innotek will also reportedly supply ToF for Apple’s mixed reality (MR) headset, Vision Pro.