LG Innotek will spend $1 billion to expand camera production for iPhone, which will increase the company's dependence on Apple

LG Innotek will spend $1 billion to expand camera production for iPhone, which will increase the com

One of the largest South Korean manufacturers of LG Innotek smartphone components is making considerable efforts to expand the production of Apple camera modules, and from the experience of other companies, its decision to spend about $1 billion on scale production could have adverse consequences.

In 2021, the company earned about $7.9 billion in the sale of iPhone camera models, which is about 75% of the company's total sales. However, some historical parallels show that relying mainly on Apple's collaboration is dangerous. It is known that in the past Japan's LCD-display manufacturer Japan Display has already lost significant funds, investing actively in Apple's production in future profits.

The LG Innotek plant in the south Korean city of Gumi is releasing cameras for iPhone 14 at an accelerated rate. This year Apple ordered 50 percent more components than in the past. If previously iPhone produced LG Innotek, Japanese Sharp and Chinese Offilm, the latter blacklisted American authorities in 2021, and Sharp was unable to make effective use of the opportunities created by the COVID-19 outbreak in Viet Nam. As a result, the resulting "vacuum" filled the LG Innotek products. In addition, while its primary client was LG Electronics, LG Electronics, with its refusal to produce smartphones, production facilities were released from LG Innotek.

However, JDI ' s experience shows how dangerous such cooperation can be. In 2015, the display manufacturer sold more than 40% of Apple ' s products. Against this background, the company started building a new $1.19 billion plant to produce LCD panels for iPhone. However, the iPhone 6s sales, which started in the fall of that year, were not very successful, and Apple, which provided funding for the project, offered JDI to complete the construction, leaving the Japanese business in a difficult position. The plant was still completed and later sold to Sharp.

In addition, Apple usually receives key components from three suppliers, so the company is rumored to be looking for another camera module manufacturer instead of Ofilm. This means that there is no guarantee that LG Innotek will continue to receive large orders.

Moreover, while Apple's business is usually profitable, the tough demands of smartphone manufacturers for the organization of production and the unstable demand for the company's models make it a high-risk priority to cooperate with it.