🥜 Is the Big Tech Love Call and AI Substrate Expansion Really Verifiable? - 2026.06.22

Hello, this is Peanut from Bultagi.com. The market is heating up over LG Innotek lately, but is it really justified. I want to ask if all these rosy news can actually be verified with numbers. Rather than being swept away by emotions, it is time to calmly check the facts and valuation.

💼 Big Tech's Love Call and AI Substrate Expansion, Is It Really Verifiable ⚠️

It has been reported that three US Big Tech companies have proposed large-scale investments to LG Innotek to expand the production line of FC-BGA for AI servers ^[1]. As the demand for AI substrates surges globally, it is said that long-term agreements (LTA) for stably supplying substrates produced from the new lines over multiple years are also being discussed with two of these companies ^[1]. There is also talk that this investment attraction could be confirmed as one of the regional investment plans, such as in Gumi, at the business leaders' meeting scheduled for the 29th ^[1].

In addition, news that LG Innotek's CTO, along with executives from major LG affiliates, visited Nvidia's headquarters in the US on the 22nd (local time) to solidify cooperation in physical AI and future mobility has stimulated the market ^[2]. The KB Securities Research Center also analyzed that the center of gravity of cooperation between Nvidia and Korean companies is spreading beyond memory to physical AI, and LG Innotek's role in the mobility sector will grow ^[5].

Amid this atmosphere, the internal business division has boldly presented a vision called "2 Trillion-tek," aiming to achieve a total operating profit of 2 trillion won by 2031 ^[3]. Reflecting these immense expectations, the market recently showed intense interest as securities firms raised their target price for LG Innotek by up to 248.5% ^[4].

📉 Bearish Scenario Behind the Bullish Trend, Caution for Profit-Taking is Needed 🛑

The market is entirely intoxicated with pink prospects, but when approaching from a short- to mid-term swing perspective, presenting a bearish scenario once even in a bullish atmosphere is my trademark. Can the current price level be fully justified by fundamentals.

Looking at the closing price today (22nd), it closed at 1,130,000 won, down 1.31% from the previous trading day. The trading volume was 291,198 shares, and while foreigners net bought 63.04 billion won, institutions net sold 4.84 billion won, showing a mixed move. Since plummeting 10.76% to record 1,145,000 won on the 19th, it is somewhat uncomfortable that it failed to show a clear rebound and rather closed lower despite the strong material of visiting Nvidia's headquarters.

Securities firms are competing to raise their target prices, but can this target price gap be fully explained when applying traditional valuation models such as a PER of 12 times or a PBR of 1.2 times from the peak of past cycles at the current stock price level. I doubt whether the creation of practical free cash flow capable of defending the EV/EBITDA 7 times level will materialize right away from the second half of the year.

Discussions on long-term agreements with Big Tech and Nvidia cooperation are certainly excellent materials, but there is a long time lag before they lead to actual contract signings and mass production results. In particular, high value-added substrate businesses like FC-BGA must overcome the heavy hurdles of yield stabilization and depreciation burden. If the investment confirmation announcement on the 29th of this month falls short of market expectations or is delayed, or if the cooperation with Nvidia does not immediately connect to specific orders, there is a risk that the current expectations will instantly turn into a value trap.

The blueprints presented by authoritative IB reports might be a story for 2031. Rather than reckless optimism, I think it is time to place it as a candidate for profit-taking trim due to short-term surges and focus on risk management. Peanut views that a conservative approach is reasonable until the current favorable factors actually plug into an EPS increase in the financial statements.

📰 Reference News (5)

1

"LG Innotek Takes the Lead in AI Substrates" Attracts Investment from 3 Big Tech Firms

네이버뉴스 · 2026.06.22

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2

LG Partners with Nvidia... Accelerating Talent Acquisition for Physical AI Commercialization

네이버뉴스 · 2026.06.22

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3

"Aiming for 2 Trillion Won"... LG Innotek Expands Beyond Mobile into AI Memory - Culture Journal 21

네이버뉴스 · 2026.06.22

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4

Stock Price Already Surged... Brokerages Belatedly Raise Target Prices

네이버뉴스 · 2026.06.22

📰 View original

5

[Today

네이버뉴스 · 2026.06.22

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