From iPhones to Humanoids: LG Innotek Bets Big on Robotics and AI

[Korea Financial Times, Gwak Horyung] Moon Hyuk-soo, president of LG Innotek, is accelerating a fundamental transformation of the company — shedding its reputation for heavy reliance on iPhone sales and repositioning it as an AI and robotics solutions provider.

This strategic shift did not emerge overnight. A string of brokerage reports has recently flagged LG Innotek as relatively undervalued. While the company's share price has risen more than 80% compared to a year ago, it has lagged behind the KOSPI index, which gained 116% over the same period. Last year's price-to-book ratio (PBR) stood at 1.1x, barely above the company's net asset value, with analyst target prices set at 1.3x to 1.4x PBR one year out.

By contrast, rival Samsung Electro-Mechanics posted a PBR of 2.02x last year, meaning the market values its shares at roughly twice its net assets. One-year target prices are calculated at 3x to 4x PBR.
Camera modules accounted for 83% of LG Innotek's revenue last year, the vast majority of which are supplied to Apple, leaving its earnings heavily tied to iPhone sales volumes.

At Samsung Electro-Mechanics, camera modules represent just 34% of revenue. The company has earned recognition for its growth prospects by diversifying into businesses tied to AI data centers — including multilayer ceramic capacitors (MLCCs) and high-value-added semiconductor substrates (FC-BGA). In an ironic twist, MLCCs — now Samsung Electro-Mechanics' most prized business — were originally acquired from LG Electronics Components, LG Innotek's predecessor, during the foreign exchange crisis in late 1997.


Moon, who has led LG Innotek since 2024, has made business diversification through future-oriented businesses a central pillar of his strategy. He has publicly committed to growing the company's portfolio of growth businesses — including automotive camera modules, communications and lighting components, and semiconductor substrates (RF-SiP, FC-CSP, FC-BGA, and tape substrates) — to KRW 8 trillion, or 25% of total revenue, by 2030.

On the semiconductor substrate front, the company has historically focused on modem substrates for smartphones, but last year entered the new market for PC-use FC-BGA. In 2022, LG Innotek acquired LG Electronics' Gumi Plant 4 and converted it into a dedicated FC-BGA production line. The company is now evaluating a second capacity expansion, with the goal of making a full-scale entry into the server-use FC-BGA market.
Speaking at a briefing following the recent annual general meeting, Moon said, "The decision on expanding the semiconductor substrate plant will be finalized within the first half of this year, with full loading expected around the second half of next year. We plan to double our current production capacity."

A meaningful rerating of the stock is widely expected to begin once the company makes inroads into the robotics components business — an area it has been investing in considerably.

LG Innotek is reported to have begun supplying camera modules to Boston Dynamics, the robotics subsidiary of Hyundai Motor Group. In May last year, the two companies signed an agreement to jointly develop components for robots: LG Innotek is responsible for producing vision sensing modules, while Boston Dynamics handles the software that processes the data collected through those modules. The components are slated for integration into the next-generation model of Atlas, the humanoid robot developed by Boston Dynamics.

LG Innotek is also said to be on the verge of securing a camera module order for Optimus, Tesla's humanoid robot. The company already supplies camera modules for Tesla's Model Y and other electric vehicles, providing a foundation for the partnership.

In an interview with international media on the 14th (local time), Tesla CEO Elon Musk said the company would begin production of the third-generation Optimus robot this summer, with mass production set to commence in 2027.

Tesla has begun converting its California factory — previously used to manufacture Model S electric vehicles — into a dedicated Optimus production facility. The company aims to establish a mass production system capable of producing one million units annually, with the goal of bringing Optimus' current manufacturing cost of hundreds of thousands of dollars down to USD 20,000–30,000, comparable to the price of a compact car. The vision is to sell Optimus not only for factory use but also as a service robot for general households.

Should LG Innotek secure a place in Tesla's core value chain in the physical AI space, the company stands to shed its image as a mere IT components supplier and earn a new identity as an AI and robotics solutions company.

Moon indicated that large-scale mass production of robotics components is expected "around 2027 to 2028."

Meanwhile, its existing mobile camera module business is expected to buy the company the time it needs to complete its transition to new businesses.

According to FnGuide, a financial data provider, LG Innotek's estimated performance for this year stands at KRW 23 trillion 351.3 billion in revenue and KRW 876.5 billion in operating profit — increases of 6.6% and 31.8%, respectively, compared to last year.

Despite lingering concerns over sluggish smartphone demand amid semiconductor price volatility, the company is expected to sustain its upward earnings trajectory, underpinned by a solid share of Apple's supply chain.

Gwak Horyung (horr@fntimes.com)