Cracks in the 'Apple Jeguk'... Korean Parts Companies Seeking Business Diversification

Samsung and LG Display Supply OLED
LG Innotek Supplies Camera Modules, etc.
Samsung Electro-Mechanics Supplies MLCC and FC-BGA

Expanding Automotive Business Share to Reduce Apple Dependence

The domestic electronics industry, which is highly dependent on Apple, is contemplating risk response measures. Efforts are underway to relatively reduce the proportion of Apple sales by expanding the automotive electronics business segment.

According to the 2021 fiscal year supply chain list recently released by Apple on the 3rd, 11 domestic companies including Samsung Electronics, SK Hynix, LG Chem, LG Display, LG Innotek, LX Semicon, Samsung SDI, and Samsung Display are included.

Samsung Display and LG Display supply OLED panels to Apple. Samsung Display, which recorded strong performance due to the success of the iPhone 15 series last year, partially compensated for the sluggishness of its parent company, Samsung Electronics. LG Display also turned a profit in the fourth quarter of last year for the first time in seven quarters, alongside the success of the iPhone 15 series. The Apple sales proportion for domestic display companies is about 21% for Samsung Display and 30% for LG Display.

They are expected to increase the share of automotive OLED panel business in the future. LG Display is mass-producing automotive display panels at the E5 line in Gumi, and following Gumi, it is preparing to establish a two-track mass production system aiming for automotive display mass production at the Paju plant after 2025.

LG Innotek is considered a company with very high dependence on Apple domestically. It supplies most of the camera modules to Apple. Industry insiders estimate LG Innotek's Apple sales dependence to be around 80%. In its business report last year, LG Innotek recorded sales from a "single customer accounting for more than 10% of sales" at 16.4028 trillion KRW. This accounts for about 87% of last year's total sales of 20.6053 trillion KRW, presumed to be Apple. Besides camera modules, it also supplies 3D Time-of-Flight (ToF) sensing modules and antenna-in-package (AiP) substrates. Therefore, lowering dependence on Apple is a challenge for LG Innotek. Moon Hyuk-soo, CEO of LG Innotek, recently stated, "We will increase automotive electronics business sales to the 5 trillion KRW level within five years."

Samsung Electro-Mechanics supplies multilayer ceramic capacitors (MLCC) and high-performance semiconductor substrates called flip chip-ball grid array (FC-BGA) to the iPhone. Recently, it is also known to provide FC-BGA for extended reality (XR) devices. Samsung Electronics plans to raise the automotive electronics sales proportion, currently in the mid-teens percentage, to 20% by next year, and is pushing to strengthen capabilities in high value-added industries. Recently, it has developed high-voltage MLCCs for electric vehicles and plans to expand its automotive product lineup.

An industry insider said, "It is not easy to find a customer as reliable and important as Apple," adding, "Lowering dependence on Apple has been a long-standing challenge for all companies, but for now, they are pursuing business diversification while closely monitoring issues related to Apple."

This content was produced with the assistance of AI translation services.