South Korea's LG Innotek expects its semiconductor substrate business to improve in 2027 as it pursues long-term supply agreements (LTAs) with major technology companies and prepares to enter the high-end AI accelerator market. Under this strategy, the company aims to secure customer commitments before expanding production capacity as it seeks to diversify beyond smartphone camera modules.
President and CEO Moon Hyuk-soo said at the Korea Electronics Show (KES 2026) in Seoul on October 13 that LG Innotek was continuing to pursue long-term flip-chip ball grid array (FC-BGA) supply agreements and expected business conditions to improve next year.
Moon described the companies involved as well-known technology firms but did not identify them or disclose contract values, supply volumes or signing dates. Existing customer agreements remain separate from negotiations over additional capacity and new business.
Big Tech commitments shape FC-BGA expansion
The remarks follow LG Innotek's June disclosure that it was in detailed discussions with two major customers over additional investment and long-term supply arrangements.
The company is seeking to link additional capacity investments to customer purchase commitments and LTAs. Such arrangements could improve revenue visibility and reduce the financial risks associated with building capacity for increasingly complex semiconductor substrates.
LG Innotek entered the FC-BGA market in 2022, initially serving networking and television applications before expanding into PC processors and higher-performance computing.
The company expanded its FC-BGA supply to PC CPUs in the third quarter of 2026 and plans to enter the AI accelerator market in 2027.
Its next growth opportunity lies in larger, higher-density substrates designed for AI training and inference processors, where increasingly complex chip packages require more advanced manufacturing capabilities.
AI accelerator substrates approach commercial production
In September 2026, LG Innotek unveiled an FC-BGA substrate for AI accelerators measuring more than 100 millimeters on each side, demonstrating its push into higher-value packaging applications.
NewsPim reported on October 2 that LG Innotek had begun discussions with customers over commercial supplies of AI accelerator substrates, which included product performance and quality verification with some prospective buyers.
The company targets mass production of high-value FC-BGA substrates for AI training and inference applications in 2027. Customer qualification remains a critical step, and the company has not disclosed any confirmed commercial orders for the new products.
LG Innotek's Package Solution division, which includes FC-BGA and other semiconductor substrates, generated KRW498.4 billion (approx. US$370 million) in second-quarter revenue, up 20% from a year earlier. Increased FC-BGA shipments, along with demand for other advanced substrates, contributed to the growth.
The company aims to expand the division into a business generating KRW1 trillion in annual operating profit by 2031, reflecting its broader efforts to build a more profitable product portfolio.
Glass-core substrates remain a longer-term bet
LG Innotek is also developing glass-core substrates as a potential alternative to conventional organic-core packaging technology for increasingly large and complex semiconductor packages.
Moon said a pilot production line was operating at the company's Gumi facility, with initial supply potentially beginning around 2028. The technology remains under development, and commercial shipments have not started.
Glass-core substrates offer improved dimensional stability and reduced warpage, potentially supporting denser circuitry and larger chip packages. However, manufacturing yields, process integration and customer qualification remain significant challenges to commercial adoption.
The 2028 target maintains LG Innotek's previously disclosed development schedule rather than signaling an acceleration.
Article edited by Jerry Chen
