LG Innotek’s Q3 Operating Profit Declines
Revenue Reaches 5.6851 Trillion Won, “Due to poor sales of Apple’s ‘iPhone 16’, LG Innotek recorded weak results. The iPhone 16 series is struggling more than expected.”
On the 23rd, LG Innotek announced that its operating profit for Q3 this year was 130.4 billion won, a 28.9% decrease compared to the same period last year.
However, revenue for the same period increased by 19.3% to 5.6851 trillion won.
A company representative stated, “The mass production of new models by our clients has led to an increase in high-value camera module supplies, and there has been growth in sales of semiconductor substrates and vehicle communication modules.” Nevertheless, they also noted that “the decline in the won-dollar exchange rate, decreased demand in front-end industries such as electric vehicles and displays, and intensified supply competition in the optics business resulted in a drop in operating profits compared to the same period last year.”
Industry analysts suggest that the company did not benefit from the ‘Apple effect’ as much as expected. According to Morgan Stanley, the first week’s sales of the iPhone 16 reached 37 million units, a 12.7% decrease from the previous model. Production of the iPhone 16 series in Q4 this year is also expected to be slightly reduced compared to its predecessor. Ming-Chi Kuo, an analyst known for his expertise on Apple, estimated that the iPhone 16 series would ship 88 to 89 million units in Q4, lower than last year’s 90 to 91 million units for the previous model.
Looking at the business segments, the Optical Solution division recorded a 24% increase in sales, reaching 4.8369 trillion won compared to the same period last year. This was driven by the mass production of high-value mobile camera modules due to new model launches by clients, as well as an increase in vehicle camera module supplies, marking a 31% increase from the previous quarter.
The Substrate Materials division saw a 13% increase in sales year-on-year, reaching 370.3 billion won, although it was a 2% decrease from the previous quarter. There was an increase in the supply of semiconductor substrates like RF-SiP (Radio Frequency-System in Package) due to new product launches by clients, but the demand for display products such as COF (Chip On Film) remains weak due to sluggish TV sales in the front-end industries.
The Vehicle Components division recorded sales of 477.9 billion won, a 9% decrease from the same period last year and a 4% decrease from the previous quarter. Sales performance declined due to a slowdown in the growth of the electric vehicle market. However, sales of communication modules for autonomous driving vehicles have been steadily increasing, with order backlogs also growing each year, reaching 11.9 trillion won by Q3 this year.
A company representative stated, “Sales of vehicle components, key businesses such as vehicle cameras, communication modules, and lighting, are increasing annually, and the order backlog in the vehicle components business stands at 12 trillion won, showing progress in the advancement of our business structure.” They added, “We will continue to enhance our market-leading position by expanding the early proposal of advanced technologies and products, and improve profitability by utilizing AI and digital twins to enhance cost competitiveness, as well as strategically reorganizing production locations.”