LG Innotek target price 120 won, stock price this year 184% up

KB Securities 19 raised its target price for LG Innotek to 120 won. It said demand for high-priced substrates is growing as AI data centers expand. The expansion of long-term supply contracts with big tech customers was also cited as a factor that makes it easier to gauge earnings in advance.

LG Innotek shares rose 184% this year. The company was seen as benefiting from price increases amid tight substrate supply. Analysts also said the substrate business had begun to receive a valuation similar to that of the semiconductor industry.

Substrates are key components that connect semiconductor chips and electronic devices. AI data centers use many high-performance semiconductors. This has led to growing demand for more sophisticated, higher-priced substrates.

A long-term supply contract is an agreement under which a customer secures a certain volume for a set period. When supply is scarce, customers seek to lock in stable volumes first. This has prompted assessments that the revenue flow of substrate makers may become easier to anticipate.

In the substrate industry, cases have been cited in which long-term supply contracts are offered together with support for capital investment. Customers commit to volumes over an extended period, while manufacturers expand production capacity. The point is that this type of contract structure could become more common if supply shortages persist.

Some assessments have also suggested that LG Innotek’s share-price trend is beginning to resemble those of semiconductor stocks such as Samsung Electronics and SK hynix. The reason given is that investment in artificial intelligence data centers and demand for semiconductor components are moving together. In the market, views have grown that the substrate business should be seen as part of the semiconductor supply chain rather than as a simple component business.