LG Innotek to co-develop large AI substrate with Big Tech firm

Cho Ji-tae, head of LG Innotek's Package Solution Business, speaks during a press conference at the company's headquarters in western Seoul, Tuesday. Courtesy of LG Innotek

LG Innotek said it is working with a North American Big Tech company to develop large semiconductor substrates for artificial intelligence (AI) applications, with the company expecting "tangible results" by the end of this year.

The company announced its substrate business road map during a press conference at its headquarters in western Seoul, Tuesday, noting that it plans to achieve over 1 trillion won ($662.6 million) in annual operating profit from the business by 2031, which is nearly a 10-fold growth compared to last year’s 128.9 billion won.

During the conference, Cho Ji-tae, head of LG Innotek's Package Solution Business, and Myeong Se-ho, vice president of development for the unit, said the company is developing large flip chip-ball grid array (FC-BGA) substrates and is discussing joint development plans with North American customers.

"We are now working with North American customers to jointly develop over-100-body FC-BGA," Cho said. "These are customers that have made financial commitments to secure our production capacity."

FC-BGA is an advanced substrate for AI servers on which chips such as central processing units, graphics processing units and high-bandwidth memory are mounted. As processors become more powerful, chipmakers are seeking to develop more memory chips on substrates, making the competition increasingly centered on manufacturing larger substrates with higher density.

The over-100-body FC-BGA mentioned by Cho refers to products measuring more than 100 millimeters on each side, putting them among the largest substrates currently under development for AI applications. During the conference, the company said customers are already making inquiries about 200-millimeter products.

LG Innotek's large flip chip-ball grid array substrate samples / Courtesy of LG Innotek

The company said it is expecting that the mass production of server network FC-BGA substrates will likely begin in the second half of this year, while FC-BGA substrates for AI training and inference will begin in 2027.

"Looking at global substrate makers, most have already secured advance orders based on long-term agreements through 2029," Cho said. "These are not simple verbal arrangements but binding contracts with strong penalty clauses tied to market fluctuations, which is why we believe long-term growth in the AI semiconductor substrate market remains solid … We are also prioritizing our manufacturing capacity for customers that have made financial commitments."

LG Innotek's Radio Frequency-System in Package substrate / Courtesy of LG Innotek

During the conference, the company showcased its substrate portfolio of FC-BGA, Radio Frequency-System in Package (RF-SiP) for smart device communication modules and antennas, Flip Chip-Chip Scale Package (FC-CSP) for mobile application processors (APs) and low power memory chips

LG Innotek holds the industry’s leading position in RF-SiP, accounting for a 65 percent market share last year among the world's top five radio frequency module customers.

The company said RF-SiP demand is expected to remain strong as connectivity needs for smart glasses and extended reality devices increase, while the technology is also being adopted in satellites. Demand for FC-CSP is also growing, driven by smartphone APs and low-power memory chips.

LG Innotek will begin the construction of a new semiconductor substrate plant in Vietnam this month, with plans to first expand RF-SiP and FC-CSP production lines to meet demand from customers. The company plans to invest around 1 trillion won in RF-SiP and FC-CSP facilities, along with hundreds of billions of won to expand FC-BGA production.

"The rapid progress of semiconductors and the ongoing exponential demand growth are requiring substrate makers to expand their production capacity more than tenfold," Cho said. "By staying ahead in technologies that customers need and proactively offering those capabilities, LG Innotek will play a major role in the growth of the semiconductor and AI industries."