LG Innotek targets auto business
By Kim Yoo-chul
Lee Ung-beom LG Innotek CEO
LG Innotek said Tuesday it aims to generate at least 1 trillion won in orders for camera modules to be used in automotive solutions by 2017 as part of its renewed strategy to find new cash cows.
“Diversification is the key to our growth because Innotek is increasingly being pressured to tackle uncertainties and to seek corporate sustainability by shifting focus toward untouched territories,” CEO Lee Ung-beom was quoted as saying in a press release.
“The automotive sector has huge growth potential and is very lucrative, should we jump in.” Innotek is a global leader in components for various applications.
The statement said the LG affiliate plans to win 1 trillion won worth orders from leading carmakers for its camera modules.
It added Innotek won a deal to supply automotive camera modules to a global carmaker in January, though spokesman Kim Hee-jeon declined to unveil the name of the new client.
To ensure success in the business shift, Innotek’s car research and development unit was recently transferred to the car parts unit, while dispatching more of its qualified workforce in marketing, quality checking and manufacturing to the car-parts division, said the statement.
The change comes as Innotek is trying to cut its heavy dependence on smartphones, as the global smartphone market is being saturated, hurting its profitability.
“Camera modules are considered as crucial elements to be used in almost all automotive solutions. For example, a premium car utilizes seven or eight camera modules. As safety for drivers is the top priority for automakers, Innotek is confident it will find new business opportunities,” Kim said.
Innotek plans to be one of the few survivors of a new trend in the automotive industry because car manufacturers are strengthening collaboration with technology companies for various advanced solutions amid the increase in the number of connected electric vehicles.
LG Group’s main technology affiliates ― including LG Electronics, LG Display, LG Chem and LG Innotek ― are putting more resources on enhancing car-related businesses amid stalled growth in consumer gadgets.
TSR, a market research firm, expects the demand for camera modules to go over $3.5 billion from this year’s estimated $2.6 billion. The automotive camera module market is currently led by Panasonic of Japan and Magna Electronics of Canada.