To spend up to 500 billion won in FC-BGA production facilities
LG InnoTek is entering the flip chip (FC)-ball grid array (BGA) market, TheElec has learned.
The South Korean component maker is expected to make its investment plan into the high-value semiconductor substrate market public in the third quarter.
LG InnoTek has already manufactured and supplied samples of FC-BGA to a potential customer, people with direct knowledge of the matter said.
The company likely made the sample in its research lab as it doesn’t have a production line yet for FC-BGA.
LG InnoTek is expected to spend over 400 billion won to 500 billion won to build production facilities for FC-BGA.
The amount is necessary for the company to compete with South Korea’s largest FC-BGA producer Samsung Electro-Mechanics, separate people familiar with the matter told TheElec.
Daeduck Electronics, which also manufactures semiconductor substrates, had recently said it plans to spend 160 billion won to build FC-BGA production facilities.
LG InnoTek’s new FC-BGA facilities will likely be housed at either its Paju plant, where it recently removed LED equipment, or at its Gumi plant, where there are empty spaces that can be used.
If the company didn’t use these per-existing spaces, spending to build FC-BGA facilities would cost it close to 1 trillion won, the people said.
There is currently a global shortage in FC-BGA and LG InnoTek is likely planning to capitalize on this, one of the people said.
Japan’s Ibiden has spent around 3 trillion won in FC-BGA since 2019. LG’s entering the market will narrow the overall capacity of FC-BGA between South Korea and Japan, the person said.
LG InnoTek had named vice president Lee Hyuk-soo, previously the leader of substrate material research, as the task leader for its new FC-BGA venture back in March, they added.
Few companies manufacture FC-BGA substrates; these include Samsung Electro-Mechanics of South Korea and Ibiden and Shinko Denki of Japan.
The COVID-19 pandemic last year has caused demand for FC-BGA, which are needed in servers and networks, to hike, causing the current shortage.
Ibiden and Shinko Denki are the leaders in server FC-BGA. For PC FC-BGA, they compete with Samsung Electro-Mechanics as well as Taiwanese players such as Nanya and Unimicron. Austria’s AT&S is also a solid firm in the sector.
LG InnoTek has only manufactured FC-chip scale package for smartphones application processors in the past, an area where it competes with Samsung Electro-Mechanics, Daeduck, Unimicron and others.