A flip-chip ball grid array (FC-BGA), one of LG Innotek’s semiconductor substrate products. LG Innotek
LG Innotek (011070.KS) is expanding its chip substrate production base into Vietnam, following its operations in Gumi, North Gyeongsang Province. The company aims to diversify its production sites to grow its package solutions business into a core operation generating more than 3 trillion won in revenue by 2030.
LG Innotek signed a memorandum of understanding (MOU) with the city of Haiphong, Vietnam, on Thursday for an investment to expand a chip substrate plant, at LG Science Park in Magok, Seoul. The signing ceremony was attended by Do Thanh Trung, the mayor of Haiphong, along with other local officials, as well as LG Innotek executives including President Moon Hyuk-soo.
Under the agreement, LG Innotek will pursue the expansion of a chip substrate plant in the Haiphong region of Vietnam. The investment will be carried out directly by the company’s Vietnam production subsidiary. Construction is set to begin this July and be completed in May 2027. The site spans 98,000 pyeong, or approximately 330,000 square meters, equivalent to 45 soccer fields.
The expanded plant will produce major chip substrate products including radio frequency system-in-package (RF-SiP), flip-chip chip-scale package (FC-CSP), and flip-chip ball grid array (FC-BGA).
With this investment, LG Innotek is extending the dual-site production strategy it has applied in its optical solutions business to its package solutions business.
“The domestic Gumi facility will serve as a ‘mother factory’ responsible for developing new chip substrate technologies and producing new-model and high-value-added products, while the expanded Vietnam plant will operate as a production base for general-purpose chip substrates,” an LG Innotek official said. Through this, the company plans to improve production efficiency and profitability and further strengthen the competitiveness of its package solutions business.
Rising demand for chip substrates is cited as the key backdrop for this expansion. Demand for RF-SiP is expected to grow with the expanding adoption of 5G communications in smartphones and the future introduction of 6G. For FC-CSP, demand for low-power, high-performance products is increasing on the back of the spread of on-device AI, with revenue growth expected to center on premium application processors (APs) and memory. Demand for FC-BGA is also rapidly expanding, with product specifications advancing as global big tech companies continue their AI investments.
In line with these market trends, LG Innotek is currently running its chip substrate production lines at the Gumi facility in North Gyeongsang Province at nearly full capacity. As the market is expected to continue growing, additional investment is needed to expand production capacity.
LG Innotek’s Magok headquarters. Photo courtesy of LG Innotek
Several factors played a role in LG Innotek’s choice of Haiphong, Vietnam, as the expansion site. “Based on our experience operating a local production subsidiary over a long period, infrastructure development is easier, and our high geographic proximity to major semiconductor back-end processing companies allows us to strengthen our responsiveness to customers,” the company said. Securing cost competitiveness was also a major factor.
Separately from the Vietnam investment, LG Innotek is reviewing domestic chip substrate-related investment this year. In March last year, the company signed an investment agreement worth 600 billion won with the city of Gumi, North Gyeongsang Province, to strengthen the competitiveness of its package and other businesses by the end of this year. As demand for chip substrates is expected to keep expanding, the company is also keeping open the possibility of additional investment.
“The package solutions business is a core growth pillar for LG Innotek with both profitability and growth potential,” President Moon Hyuk-soo said. “Through strategies such as dual-site production, we will expand package solutions revenue to more than 3 trillion won by 2030 and raise its profit contribution to the level of the optical solutions business.”