S Korea’s LG Innotek expands semiconductor substrate plant in northern Vietnam

LG Innotek, the electronic components arm of LG, will expand its semiconductor substrate manufacturing facility in the northern port city of Hai Phong, reinforcing Vietnam’s role in the company’s strategic “dual-hub” manufacturing model for its package solutions business.

Under an MoU signed between the company and Hai Phong authorities on Thursday, the expansion will be carried out through LG Innotek’s Vietnamese manufacturing subsidiary.

Construction is scheduled to begin in July 2026 and be completed by May 2027. The new facility will cover approximately 330,000 square meters, equivalent to around 45 football fields.

LG Innotek has not disclosed the investment value of this expansion. However, the Korean company’s decision to increase semiconductor substrate production capacity in Hai Phong highlights Vietnam’s growing importance in the group’s high-tech component manufacturing strategy.

From camera modules to semiconductor substrates

The expanded facility in Hai Phong will manufacture key semiconductor substrate products, including RF-SiP, FC-CSP, and FC-BGA.

RF-SiP (radio frequency system-in-package) is a packaging substrate that integrates radio-frequency components and is widely used in mobile devices, particularly 5G smartphones. FC-CSP (flip chip-chip scale package) substrates are used in application processors, memory chips, and other high-performance chips found in mobile devices.

Meanwhile, FC-BGA (flip chip-ball grid array) represents a higher value-added segment commonly used in CPUs, GPUs, server chips, networking equipment, and large-scale data-processing systems. This type of substrate plays a critical role in connecting chips to motherboards while supporting signal transmission, power delivery, and thermal management for increasingly complex processors.

With the boom of AI, especially generative AI and data center infrastructure, demand for large-size, multi-layer, highly integrated semiconductor substrates is increasing significantly. High-performance AI chips require advanced packaging substrates to process massive data volumes, reduce latency and power loss, and support high-speed connectivity.

Therefore, LG Innotek’s decision to include FC-BGA production in Vietnam is more than a routine capacity expansion. It reflects the relocation of part of South Korea’s semiconductor supply chain to Vietnam, as technology companies seek additional manufacturing bases outside South Korea and China.

Dual-hub strategy: Gumi as “mother factory,” Hai Phong as large-scale manufacturing base

According to LG Innotek, the Hai Phong project is part of the company's dual-hub manufacturing strategy for its package solution business.

Under this model, the Gumi plant in South Korea’s North Gyeongsang province will serve as the “mother factory,” responsible for developing new technologies, producing prototypes, and manufacturing high-value-added products.

The expanded Hai Phong facility, meanwhile, will function as a large-scale production base for more mainstream semiconductor substrate products.

LG Innotek noted that its semiconductor substrate production lines in Gumi are already operating close to full capacity. As market demand continues to grow, expanding production capacity has become an urgent priority.

This structure mirrors the company’s approach in its optical solutions business. In the camera module segment, Vietnam has long served as a key manufacturing hub for LG Innotek, supplying global smartphone customers.

Extending this model to semiconductor substrates indicates that Hai Phong is evolving beyond an assembly location and moving toward higher tech-content manufacturing activities.

According to the Korean conglomerate, Hai Phong was selected based on three main factors: LG Innotek’s extensive operational experience in the locality, existing infrastructure, and proximity to semiconductor back-end processing companies. Competitive manufacturing costs were also a significant consideration.

This strategy aligns with the broader approach adopted by many Korean corporations in Vietnam: retaining R&D, core technologies, and premium products in South Korea while shifting large-scale manufacturing to Vietnam to optimize costs, improve delivery capabilities, and stay closer to customers within regional supply chains.

LG Innotek aims to generate more than KRW3 trillion ($1.94 billion) in revenue from its package solution business by 2030. According to CEO Moon Hyuk-soo, the business offers strong growth potential and profitability and is expected to become one of the company’s key growth drivers.

Previously, LG Innotek began investing heavily in FC-BGA production in 2022, allocating KRW413 billion ($270 million) to establish FC-BGA manufacturing lines. In March 2025, the company further signed an investment agreement worth KRW600 billion with Gumi city and North Gyeongsang province to strengthen its competitiveness in semiconductor packaging and related sectors.