Camera module manufacturer LGInnotek gradually withdrew from China

On July 31, Pulse News, the English website of South Korea's Maeil Business Newspaper, reported that against the backdrop of rising tensions between China and the United States and the restructuring of global supply chains, LG Innotek, an electronic components subsidiary of South Korea's LG Group that mainly produces camera modules, has decided to gradually relocate its camera module production line from China to Vietnam.

According to reports, industry sources revealed over the weekend that LG Innotek will gradually transfer the camera module production line from the Yantai factory in China, shift the entry-level camera module production to Haiphong in Vietnam, and will produce the flagship product in South Korea.

In early 2005, LG Innotek's camera module production line in Yantai factory began mass production, and then expanded its Chinese customer base to include Huawei Vivo OPPO Xiaomi Company, until early 2020, Yantai factory has been LG Innotek's largest overseas base. But in the first quarter of this year, the revenue of the Yantai subsidiary fell to about 150 billion won (about 839 million yuan), and the largest revenue position was given to its Vietnam subsidiary, and the Yantai subsidiary was its only net loss of 67 million won (about 375,500 yuan). In addition, as Chinese component companies dominate the country with low-cost competition, camera modules produced in the Yantai factory are now completely exported to countries outside China. As a result, LG Innotek decided to relocate the camera module production line to Vietnam, where labor costs are lower.

According to reports, LG Innotek has planned to invest 1.3 trillion won (about 7.286 billion yuan) to expand Vietnam's Haiphong production subsidiary, with the goal of starting mass production by 2025, before which the motor production line in China's Yantai plant will continue to operate.

According to public information, LG Innotek is currently the main supplier of Apple and Tesla, accounting for about 70% of the supply of iPhone camera modules and about 20% of the supply of Tesla car camera modules.

According to South Korean media BusinessKorea has reported that LG Innotek sales revenue soared from Apple's use of dual cameras on the iPhone X in 2017, and its revenue from Apple in 2022 was 15.1291 trillion won – accounting for 77.2%.

According to LG Innotek's financial report, it currently has four major businesses: Optical solutions (camera modules, 3D sensing modules, actuators), substrates and materials (packaging substrates, flexible substrates, photomask templates), automotive components (communication modules, camera radar sensor modules, power modules, lighting modules), electronic components (power modules, network connectivity modules), In 2022, LG Innotek19.5894 trillion won (about 109.5 billion yuan) of revenue, 81.5% from optical solutions (15.965 trillion won).

According to public data, LG Innotek established its first production base in Huizhou, China in 1994, and began to produce TV and lighting leds in 2011 after the initial production of CD-ROM drive motors. In 2002, LG Innotek built its second production base in Fuzhou, China. Production of LED packaging lead frame, flexible substrate and other electronic components, in 2004 LG Innotek established China's third production base in Yantai, the production of camera modules, automotive motors, vehicle parts and so on. However, LG Innotek's LED business since 2008 for many years after the announcement of the closure of LED business in 2020, 2015 LG Innotek Fuzhou base has been sold, Huizhou base was also sold in 2020, LG Innotek in China only Yantai production base.

According to the information released by Yantai Customs recently, LG Innotek Yantai factory – Lejin Electronics (Yantai) Co., LTD., currently the main production of camera modules, display power modules, automotive motors and other electronic products, according to LG Innotek Yantai Company nearly two years recruitment information shows that the company was registered in August 2004, Officially put into production in July 2005, the production of digital camera modules, power control components, etc., began to put into production in 2015, automotive motors and other projects, the current staff of about 3,000 people, the annual output value of about 4 billion yuan.

According to LG Innotek's 2022 sustainability report, LG Innotek currently has overseas production bases in China, Indonesia, Poland, Mexico and Vietnam, in addition to its local factories in South Korea. Among its 21,000 global employees in 2022, Chinese employees account for only 6.1% (1,280). It currently has a sales branch in Shanghai, China, an office in Shenzhen, China, and a production base in Yantai, China. In fact, LG Innotek's China production base, after several sales in 2015, the purchase volume of China's Yantai factory from 2018 has actually been lower than the purchase volume of Vietnam's Haiphong factory, and the purchase volume of LG Innotek from China accounts for only 3.8% in 2022.

In July this year, according to South Korean media Thelec also reported that LG Innotek announced that it would invest 1.3 trillion won in Vietnam's Haiphong subsidiary to double the camera module production capacity of the Vietnam factory, at the same time, it also said that the current LG Innotek Vietnam factory accounts for 30% of all camera module production of the company. The remaining 70% is produced by the Gumi and Paju factories in South Korea, although this proportion is slightly different from the proportion of purchases in 2022, but it also indicates that the camera module production line capacity of LG Innotek's Yantai factory in China is actually very small.