Chip packaging firm LB Lusem will expand its power chip operation to reduce reliance on display driver IC, the company CEO said on Monday.
Power chip accounted for 0.7% of its sales in 2019 but the company will expand this to 10% by 2023, LB Lusem CEO Hyunchang Shin said at a press conference ahead of its IPO.
LB Lusem won Magnachip as a customer for power chips last year. It is in talks with Panasonic and Toshiba for a potential supply deal.
LB Lusem said it has previously used mostly power chip packaging equipment from Japan but is has been collaborating with South Korean kit and material makers to secure its own power chip packaging equipment.
These new equipment allows the company to the cut cost, it said, which will increase profitability from power chips to 20% to 30% next year.
The 14 billion won out of the funding expected for its listing will be used to expand its capacity for power chips.
LB Lusem’s current capacity is around 4,000 a month for power chips but this will be expanded to 10,000 a month by the first half of 2022, the company said.
Another 32 billion won expected out of the IPO will be used to expand its display driver IC production capacity. The firm’s production capacity for display driver IC is currently 80 million a month, which was running at 88.9% capacity, but this will be expanded to 90 million a month by the end of the year, LB Lusem said.
Its customers for display driver IC include Silicon Works, Magnachip, DB HiTek, TLI, Novatek and others.
LB Lusem was focusing on chip on film in its display driver IC business. Chip on film attaches the driver IC on a film, which is then attached to the display.
The company also has a technology to deposit resin on the chip on film to increase heat resistance. It also offers chip on film with electromagnetic interference tape attached. It also has dual-sided chip on film for mobile application.
It is also expanding into chip on plastic business, which the driver IC is attached to the plastic substrate of OLED panels directly, without packaging.
LB Lusem CEO Shin said OLED panels require more display driver ICs than liquid crystal display as well as more sophisticated technology.
This will help with the company’s earnings going forward. LB Lusem recently applied a new advanced automation system to its factory, which will allow it to meet increased demand for display driver IC flexibly.
LB Lusem was formed as a subsidiary of LG Electronics in 2004. It became a joint venture between LG and Japan’s Lapis Semiconductor afterwards. In 2018, it joined LB Group, and adopted group affiliate LB Semicon’s bump and wafer testing technologies to its operation.
Last year, LB Lusem recorded 209.8 billion won in sales. It has grown 22.9% on average for the past three years. In operating income, it recorded 20.8 billion won in 2020.
LB Lusem is offering 6 million shares in its IPO. It is asking for a share price between 12,000 won to 14,000 won. It is expected to list in June. Korea Investment & Securities is underwriting the deal; KB Securities is also a co-underwriter.