New facility investment in the optical solution division 14% ↑
China’s O-Film benefited from LG Innotek by dropping out of Apple’s supply chain
‘Sensor shift applied’ expanded to 3 new iPhones
LG Innotek has reserved an expansion of the Apple camera module market share. LG Innotek’s reflected profit is expected to be visible as China’s O-Film’s drop in the Apple camera module supply chain.
On the 17th, LG Innotek announced a new facility investment plan of 547.8 billion won by the Optical Solution Division. This division mainly produces camera modules that are supplied to Apple. The company explained, “Securing and strengthening the competitiveness of the optical solution business.”
LG Innotek announced a new facility investment in the optical solution division at the beginning of every year. The amount of investment for the last three years was 282.1 billion won in 2018, 4798 billion won last year, and 5478 billion won this year.
LG Innotek’s increase in investment this year by 14% from the previous year appears to be a result of reflecting changes in Apple’s supply chain. Since the Apple iPhone greatly strengthens the camera specifications every two years, the new iPhone that will be released in the second half of this year will have a small change in camera technology. However, the number of Apple camera module partners has decreased from three to two. O-Film was eliminated from Apple’s supply chain in the second half of last year on suspicion of human rights violations of Xinjiang Uighurs, and this year, LG Innotek and Sharp (acquired by Foxconn, Taiwan) take over the amount.
LG Innotek has been supplying camera modules mainly to the upper iPhone lineup, but in the future, it will also supply camera modules for the lower iPhone lineup that Ofilm was in charge of. LG Innotek’s share of the Apple camera module market is expected to increase from around 50% to the mid-to-mid-50%. Sharp’s share is also expected to rise from the mid-30% to 40%. O-Film’s market share was in the high 10% range.
At the same time, three out of four new iPhones to be released in the second half of this year are expected to apply the’sensor shift’ technology. Sensor shift is a technology that prevents camera shake through an image sensor rather than a lens. In last year’s iPhone 12 series, only the top model iPhone 12 Pro Max was equipped with a sensor shift. LG Innotek’s investment seems to have also reflected the application of an expanded sensor shift.
It is also a good news for LG Innotek that the iPhone 12 series dominated the premium smartphone market. Several market research companies estimate that this year’s iPhone shipments will reach 240 million units, 20 percent more than last year. LG Innotek can expect to expand the overall market size and share.
Meanwhile, Apple is planning to entrust the final assembly (alignment) process of the camera module to iPhone manufacturers such as Foxconn from this year. Previously, camera module makers such as LG Innotek made single camera units such as wide-angle and telephoto cameras and delivered them after combining multi-camera modules. From this year, camera module makers only supply cameras, and Foxconn will take charge of the final assembly of modules.
LG Innotek is expected to offset the decrease in sales of the final assembly process by increasing the volume of the O-Film supply chain and applying sensor shifts. Last year, the company’s optical solution division sales rose 24% year-on-year to 6.778.8 billion won. This year, the stock price sees that it will increase by 10% to 7.4 trillion won.
Earlier in July last year, O-Film was eliminated from Apple’s supply chain after being included in 11 Chinese human rights abusers designated by the US Department of Commerce. Apple is expected to continue its efforts to find new camera module partners.
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