KB Securities announced on June 5 that it has raised its target price for LG Innotek from 1.6 million won to 2 million won, citing a structural supply shortage in the artificial intelligence (AI) printed circuit board (PCB) market as a long-term growth driver. The firm maintained its "buy" rating on the stock.
Kim Dong-won, head of research at KB Securities, stated, "Currently, major U.S. clients are competing to secure production capacity by offering investment support and long-term supply contracts. LG Innotek's expansion in AI PCBs is likely to lead to full operation and immediate sales upon completion."
He added, "We are pushing for new FC-BGA expansions at the request of our clients, with FC-BGA sales expected to grow from 140 billion won in 2026 to over 2 trillion won by 2030, marking a 14-fold increase in just four years."
Kim explained that AI data center companies and memory semiconductor firms are strongly requesting new investments and early expansions, noting that memory and PCBs have emerged as the most critical supply bottlenecks in the AI infrastructure development process.
The earnings outlook is also positive. Kim projected that the second-quarter operating profit would soar to 178.7 billion won, a 1,469% increase year-on-year, significantly exceeding market expectations. He noted that despite the off-season for the PCB business, the packaging solutions division is operating at full capacity, and strong mobile sales from North American clients are expected to improve optical solutions performance.
Looking ahead to the second half of the year, he forecasted that both packaging and optical solutions would enter their peak seasons, leading to an operating profit of 769.5 billion won, a 46% increase from the previous year.
He emphasized that LG Innotek will need over 2 trillion won in new investments for AI PCBs over the next two years, stating that the support from client investments and long-term supply contracts will mitigate expansion risks and enable high utilization rates and profitability immediately after expansion.
* This article has been translated by AI.
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