LG Innotek completes expansion of camera module plant in northern Vietnam

LG Innotek, a materials and components unit of South Korea’s LG Group, said on Sunday that it has completed the expansion of its camera module plant in Vietnam.

The company said it has completed the construction of the V3 plant, the latest facility at its production site in Hai Phong, northern Vietnam, and has commenced commercial operations, according to The Korea Times.

The V3 plant reportedly spans 150,000 square meters, the size of about 20 football fields, and more than doubles the company’s overall camera module production capacity in Vietnam.

With this, LG Innotek has secured the capability to supply large volumes of camera modules stably to the production lines of major smartphone makers there.

The construction of the V3 plant follows LG Innotek’s July 2023 pledge to invest $1 billion in Vietnam by the end of 2025 to enhance its optical solutions production capacity, the newspaper wrote.

With V3, the company aims to diversify its camera module production sites to better compete on cost with rivals Foxconn, a Taiwanese electronics giant and key supplier to Apple, and China-based Cowell.

LG Innotek also operates similar factories in Gumi and Paju, South Korea, with the Paju facility serving as the flagship plant for its latest high-end modules.

South Korean media cited sources saying LG Innotek aims to make Vietnam a hub for 70-80% of its camera module output within the next two to three years. Camera modules account for roughly 80% of the company’s revenue.

Since 2023, however, Apple, its largest customer, has pressured the company to cut module prices, as rivals like Cowell offer more competitive rates to the iPhone maker.

LG Innotek’s operating margin on camera modules was 7% in 2019 and 2020, rose to 8% in 2021, but has gradually declined in subsequent years, falling to just 3% in 2024.

“With the completion of the V3 plant capacity expansion in Vietnam, profitability in the camera module sector is expected to improve gradually,” LG Innotek CEO Moon Hyuk-soo was quoted by The Korea Times as saying.

Although LG Innotek remains Apple’s largest camera module supplier, Foxconn and Cowell are rapidly gaining share in Apple’s supply chain.

Amid intensifying competition, LG Innotek said earlier this year it has no plans to cede global camera module market share, even as margins decline. To achieve this, the company will ramp up production of multi-functional modules in Vietnam to boost competitiveness.

LG’s key plants in Vietnam, namely LG Innotek Vietnam Hai Phong, LG Electronics Vietnam Hai Phong, and LG Display Vietnam Hai Phong, recorded a total revenue of KRW14.99 trillion ($10.77 billion) in 2024, up 9.63% year-on-year.

LG Innotek Vietnam Hai Phong, also under LG Electronics, posted a revenue of KRW5.42 trillion ($3.89 billion), down 6% year-on-year, while its post-tax profit went down 17.8% to KRW188 billion.