{"id":31636,"date":"2026-05-27T09:18:14","date_gmt":"2026-05-27T09:18:14","guid":{"rendered":"https:\/\/www.europesays.com\/korea\/31636\/"},"modified":"2026-05-27T09:18:14","modified_gmt":"2026-05-27T09:18:14","slug":"kb-securities-raises-lg-innotek-target-price-to-1-6-million-won-on-ai-substrate-shortage","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/korea\/31636\/","title":{"rendered":"KB Securities Raises LG Innotek Target Price to 1.6 Million Won on AI Substrate Shortage"},"content":{"rendered":"

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KB Securities raised its target price for LG Innotek to 1.6 million won from the previous 1.2 million won. The brokerage judged that LG Innotek’s package solutions business will emerge as the core axis of earnings improvement as the high-performance substrate shortage prolongs amid expanded artificial intelligence (AI) data center investments.<\/p>\n

Kim Dong-won, head of KB Securities’ research division, maintained a “buy” rating on LG Innotek (011070.KS) and raised the target price to 1.6 million won in a report released on the 27th. Based on the previous day’s closing price of 1,068,000 won, this implies approximately 50% upside potential. “The cost share of substrates in Nvidia’s Vera Rubin platform is expected to expand more than twofold compared to the previous Blackwell,” Kim said. “LG Innotek’s substrate business is expected to be a direct beneficiary of the AI substrate shortage, similar to memory semiconductors.”<\/p>\n

The key is the expanding profit contribution of the package solutions business. KB Securities forecast that LG Innotek’s substrate business revenue will grow from 1.7 trillion won last year to 2.7 trillion won in 2027, an increase of about 1 trillion won over two years. As of 2027, the substrate business is estimated to account for only about 10% of total revenue but reach 30% of operating profit. This means the operating profit contribution, which stood at 11% in 2024, will expand nearly threefold in three years.<\/p>\n

The rapidly growing demand for large-area, high-multilayer substrates driven by graphics processing unit (GPU) upgrades for AI data centers and expanded central processing unit (CPU) deployment was also cited as a positive factor. In particular, such substrates were analyzed to have selling prices more than 50% higher than existing products. “LG Innotek’s substrate production lines are currently running at 100% utilization even in the second quarter, the peak off-season,” Kim said. “The supply shortage is unlikely to be resolved in the short term.”<\/p>\n

Long-term agreement (LTA) discussions with big tech companies are also enhancing earnings visibility. The report estimated that big tech companies are proposing support for new capital expenditures through advance payments to LG Innotek’s substrate business division, while also discussing long-term supply contracts. This supports the possibility that the substrate supply bottleneck will continue for the next one to two years, the report explained.<\/p>\n

The earnings outlook was also raised. Kim forecast LG Innotek’s operating profit this year at 1.1943 trillion won, up about 80% from the previous year. Next year’s operating profit is estimated to expand to 1.5922 trillion won. Second-quarter operating profit is projected at 146.4 billion won, a 1,185% increase from the same period a year earlier.<\/p>\n

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