While Samsung Electro-Mechanics has signed off on multiple spending plans to expand its production capacity for flip-chip ball grid array (FC-BGA), rival LG Innotek is yet to fix a decisive timeline to enter the competition.
LG Innotek had formed a task force for its FC-BGA business in early 2021 but the team has yet to finalize a concrete spending plan, sources said.
Because of this slow start, as the lead time for key equipment used in FC-BGA production, such as those for lithography and ABF lamination, is currently over a year-long, LG Innotek will only be able to start manufacturing FC-BGA in 2023 at the earliest.
Lead time for these equipment were around six months prior to the COVID-19 pandemic but it has been extended due to difficulty in procuring parts for them.
FC-BGA is a high lucrative package board used for chips aimed at PCs and servers.
LG Innotek doesn’t manufacture them yet but does manufacture FC-chip scale package (FC-CSP), used for chips that go into smartphones.
The South Korean component maker had already decided that it would start investing in the FC-BGA space during the first half of last year.
LG Corp, the holding company of LG Group, had also approved the plan during the second half of 2021. LG Innotek wants to spend around a trillion won in its first spending plan, sources said.
As LG Innotek doesn’t have its own FC-BGA supply chain yet, it would also be difficult for the company to ask Japanese equipment makers that manufacture lithography and ABF lamination equipment to manufacture and deliver them quickly.
These equipment makers will also look after existing customers such as Ibiden, Shinko Denki and Samsung Electro-Mechanics over LG Innotek.
There are some South Korean equipment makers that can also manufacture the equipment they usually have a lower yield than their Japanese counterparts in the sector.
LG Innotek will also need to win major customers in the meantime as well.
Another factor for the company to consider is how long the current high demand for FC-BGA, caused by the global chip shortage, will last.
FC-BGA powerhouses like Ibiden and Shinko Denki are spending billions of dollars to meet this high demand, which may cause supply and demand to balance out quicker.