LG Innotek adjusts its LED business and only retains the module business?

Recently, foreign media reported that LG Innotek decided to adjust its LED business in October and planned to withdraw all LED businesses except modules before the second quarter of next year.

Relevant sources said that in October, LG Innotek sent a document to major Korean agents and stated that it would discontinue the LED chip and packaging business. Although the product categories of each agent are different, it plans to discontinue the LED chip and packaging business before the second quarter of next year.

If the chip and package final orders originally scheduled for January 30 are low, the deadline can be brought forward. This year, LG Innotek has informed agents and clients to stop production of LED lighting products, and then the UV LED department also notified the suspension of business.

LG Innotek informed major LED distributors in October of plans to stop production of automotive, UV, and lighting LED chips and packages. After accepting the last round of orders on January 30, production was suspended on April 29.

Due to LG Innotek's suspension of LED chips and packages, the LED industry is also busy looking for new chip and package suppliers. A representative of an LED company said: The product has already obtained certification with LG Innotek's chips and packages. Now that LG Innotek has stopped production, it needs to be re-certified with other companies' chips and packages, which is a big loss. When selling LED chips in South Korea, motor safety certification such as KC or KS is required.

The plans of several manufacturers who originally expected to acquire LG Innotek's LED business unit have come to nothing. LG Innotek will also stop outsourcing OEM production to Chinese LED chip manufacturers. This suspension of production means that this OEM production will also be terminated.

According to people familiar with the matter, in order to cooperate with the group's automotive business, LG had to withdraw from the LED business to maintain production.

It is reported that LG Innotek's LED business has been losing money for 11 consecutive years since 2008. As of the first half of this year, the LED business unit has accumulated losses of more than 930 billion won (about 5.6 billion yuan).

Most of LG Innotek's MOCVD equipment in Paju has been moved to the Gumi camera module factory. MOCVD is the core equipment for the pre-process of LED chips. The LED industry has been in a stalemate due to China's low-price offensive.

After LG Innotek withdrew from the mobile phone substrate business, it also massively reduced its LED business, and its losses are expected to be reduced.