LG Innotek will take over the LG Electronics A3 factory in Gumi, Gyeongbuk for around KRW 200 billion. It is planned to be used as a production plant for camera modules for smartphones and high value-added substrates.
LG Innotek held a board meeting at the LG Science Park headquarters in Magokdong, Gangseogu, Seoul on the afternoon of the 9th and decided to take over the LG Electronics A3 factory. The exact acquisition price is unknown, but it is predicted to be between KRW 200 billion and 300 billion.
So far, LG Innotek has leased a part of LG Electronics' A3 plant to produce camera modules and semiconductor substrates. LG Electronics' A3 factory is the largest among LG Electronics' A1, A2, and A3 factories in Gumi, Gyeongbuk. The total area of the building is 403,306 square meters (about 122,000 pyeong).
The A3 plant has served as a mother factory, a hub for LG Electronics' global production base so far. Until recently, LG Electronics produced solar panels at the plant. As LG Electronics discontinued its solar panel business, an empty site was created, which matched the interests of LG Innotek, which was looking for a new site in Gumi.
For a prolonged period, LG Innotek and LG Electronics have been negotiating the price to transact the A3 plant. It was understood at the outset that disagreements over factory price discussions did not narrow. The plant site transaction between LG Innotek and LG Electronics is regarded as an insider transaction between affiliates, requiring very sensitive and complex negotiations. Although negotiations have been lengthy, it is believed that there was a move at the holding level to conclude the acquisition negotiations within the first half of the year.
LG Innotek is expected to use the A3 factory primarily as a production base for smartphone camera modules for key North American customers, whose demand is expected to continue to grow. The high value-added substrate business, which has entered the booming period, is also expected to be strengthened by using the A3 plant.
LG Innotek announced in January this year that it will invest KRW 1.56.1 trillion in the optical solution business by the end of the year. In February, the company announced that it would invest KRW 413 billion to build a mass production line for flip-chip-ball grid array (FC-BGA) substrates, which are substrates for semiconductors that have entered a new business.
LG Innotek is expected to strengthen its global leadership by additionally investing in facilities in the high value-added substrate and camera module business.
By Staff Reporter So-ra Park srpark@etnews.com