LG Innotek is accelerating its push into advanced semiconductor packaging, announcing plans to expand its substrate manufacturing operations in Vietnam as it seeks to transform the business into a key growth engine and generate more than KRW3 trillion (approx. US$1.9 billion) in annual revenue by 2030.
The South Korean electronics component maker said it had signed a memorandum of understanding with the city of Hai Phong to expand its semiconductor substrate production facilities. Construction is scheduled to begin in July and conclude in May 2027, with the investment being carried out through the company's Vietnamese manufacturing subsidiary.
While LG Innotek did not disclose the size of the investment, the new facility will span roughly 330,000 square meters — equivalent to about 45 soccer fields — underscoring the company's ambitions in a market increasingly shaped by artificial intelligence, high-performance computing, and advanced semiconductor packaging.
The expanded site will manufacture a range of high-value substrates, including radio-frequency system-in-package (RF-SiP), flip-chip chip-scale package (FC-CSP), and flip-chip ball grid array (FC-BGA) products.
The investment forms part of a broader dual-production strategy that mirrors the model LG Innotek has already adopted for its optical components business. Under the plan, its facility in Gumi, South Korea, will serve as a "mother factory" focused on research, process development, and high-end production, while Vietnam will become the company's primary mass-production base.
"The package solution business, which combines profitability and growth potential, is one of LG Innotek's key growth drivers," Chief Executive Moon Hyuk-soo said. He added that the company aims to expand the division's contribution to a level comparable to its flagship optical solutions business by the end of the decade.
Betting on AI and advanced packaging
The expansion comes as demand for advanced semiconductor substrates continues to rise, driven by AI servers, high-performance processors, and next-generation mobile devices.
Demand for RF-SiP products is expected to benefit from the broader adoption of 5G smartphones and the eventual transition to 6G networks. Meanwhile, FC-CSP substrates are increasingly used in premium mobile processors and memory products designed for on-device AI applications that require greater computing performance and energy efficiency.
The strongest long-term growth opportunity, however, may lie in FC-BGA substrates, which are becoming increasingly important as global technology companies expand investments in AI infrastructure and advanced computing systems.
Industry analysts view advanced substrates as one of the most critical — and often overlooked — bottlenecks in the semiconductor supply chain. As chipmakers pack more computing power into AI accelerators and high-bandwidth memory systems, substrate complexity continues to increase.
Intel ambitions emerge
LG Innotek's expansion also coincides with efforts to move further up the semiconductor packaging value chain.
According to industry sources, the company has been working with SK Hynix as it seeks to gain access to Intel's advanced EMIB packaging ecosystem.
EMIB, short for Embedded Multi-die Interconnect Bridge, is Intel's proprietary alternative to traditional 2.5D packaging architectures. Rather than relying on large silicon interposers, EMIB uses miniature silicon bridges embedded within the substrate to connect multiple chips, enabling higher-density integration while reducing manufacturing costs.
The technology has become increasingly important for AI accelerators and high-performance computing applications, where demand for bandwidth and power efficiency continues to grow.
Industry sources say LG Innotek has supplied engineering samples of FC-BGA substrates designed for EMIB applications to SK Hynix and is jointly developing related technologies. For SK Hynix, participation in the ecosystem could provide valuable insights into optimizing high-bandwidth memory (HBM) products for Intel's advanced packaging architecture.
At present, Intel's EMIB substrate supply chain is dominated by established players, including Japan's Ibiden, Singapore-based Simmtech, Taiwan's Unimicron, and Austria's AT&S.
Breaking into that group will not be easy.
Although LG Innotek has expanded aggressively into FC-BGA in recent years, the company remains a relative newcomer compared with established substrate manufacturers. It has yet to establish a meaningful presence in the high-end server FC-BGA market, where technical requirements are significantly more demanding.
Mass production of EMIB-compatible substrates would also require substantial capital investment in dedicated manufacturing lines. Industry observers note that competitors have already moved aggressively — Ibiden recently announced plans to invest more than KRW2 trillion in additional capacity to strengthen its position in advanced packaging.
Vietnam becomes a strategic manufacturing hub
LG Innotek said it selected Hai Phong because of the manufacturing ecosystem it has already built through years of operations in Vietnam.
The location offers proximity to major semiconductor assembly and packaging companies, established infrastructure, and lower operating costs than South Korea, making it well-suited for large-scale production.
At the same time, the company is continuing to invest domestically. Last year, LG Innotek signed a KRW600 billion investment agreement with the city of Gumi to expand its packaging business, and management has indicated that additional investments in Korea remain under consideration.
Production lines at Gumi are already operating near full capacity, highlighting the urgency of securing new manufacturing capacity as AI-related demand accelerates.
For LG Innotek, the expansion is about more than increasing output. It represents an effort to secure a larger role in one of the semiconductor industry's fastest-growing segments, where advanced packaging is becoming just as important as chip design itself.
Article edited by Jerry Chen
