Recently, Korean media have reported that camera module manufacturers in South Korea are facing profitability challenges. Both LG Innotek and Samsung Electro-Mechanics experienced profit declines due to intense price competition within the industry and a trend among smartphone brands toward incremental improvements—often described as "squeezing toothpaste"—which limits opportunities for raising prices.

According to BusinessKorea, based on submitted data, LG Innotek’s operating profit margin was 3.3% in 2024, while Samsung Electro-Mechanics' stood at just 4%. LG Innotek attributes its decline primarily to aggressive pricing strategies by Chinese camera module manufacturers seeking orders and increased order volume from Cowell (now owned by Foxconn and Luxshare Precision), a secondary Korean supplier for Apple’s iPhone. This combination has rapidly eroded profitability.

Furthermore, Samsung's smartphone sales have been weaker than in previous years, negatively impacting the profits of its camera module division at Samsung Electro-Mechanics. In 2019, peak shipments reached approximately 300 million units; however, this number decreased annually to around 230 million by 2024.

The report indicates that smartphone brands have increasingly prioritized software development and AI applications over hardware innovation in recent years. Consequently, camera specification upgrades are perceived as minor improvements, leading consumers to express concerns about a lack of significant advancements. This shift has intensified competition within the industry—a "red ocean"—directly contributing to declining profits for LG Innotek and Samsung Electro-Mechanics.

(Translated with permission from MoneyDJ News; Image source: TechNews)