IT Parts/Electronics: Self-driving Brings Change to Camera Market

The authors are analysts at Shinhan Investment Corp. They can be contacted at and respectively. – so.

Camera suppliers will make the most of the growing autonomous driving market

LG Innotek is once again attracting the attention of investors with the news that the company is in negotiations with Tesla to acquire a massive supply of camera modules for cars. We recommend focusing on the entire automotive camera industry as well as the LG Innotek, which is set to grow sharply with the advent of full/semi-autonomous vehicles.

Korean and Chinese companies dominate the global market for camera parts. With the growing trade disputes between the United States and China, Korean sellers are just as likely to secure supply deals from North American and European automakers as they are with other IT parts.

Smartphone Camera Market (KRW45tr) vs. Car Camera Market (KRW27tr)

We see strong growth potential for the automotive camera industry for the following reasons.

First, ASP levels are higher for car cameras (KRW 30,000-50,000 per unit) versus smartphone cameras (KRW 5,000-10,000 per unit).

Second, the number of car-mounted cameras is expected to increase to 10-15 units going forward compared to three to four cameras in smartphones.

Based on the above, the annual smartphone camera market is estimated to be worth about KRW 45 trillion (1.4 billion smartphones x 4 cameras x ASP worth KRW 8,000). By comparison, the annual market for car cameras is expected to grow to nearly KRW 27 trillion (90 million vehicles x 10 cameras x ASP is KRW 30,000).

Cherry picking based on sales and segment sales and growth

The focus of the market should be on camera parts companies as Tesla and Apple are said to be in the process of regulating the supply chain for their electric vehicles. We believe that companies that supply parts for smart/self-driving vehicles deserve higher ratings. It is currently trading at a PER of around 10x, similar to other IT parts makers, but should see a re-rating of the stock based on strong growth potential. Domestic suppliers of car camera parts include LG Innotek, Sekonix, Mcnex, Samsung Electro-Mechanics, Partron and OPTRON-TEC.

We recommend focusing on: 1) LG Innotek which has the absolute highest sales of auto camera parts at around KRW 300 billion among its domestic peers; 2) Sekonix has the largest sales share (35%) of auto camera parts, which leads to a sharp improvement in overall profit; and 3) Partron, which is expected to see the strongest growth in auto cam parts sales in 2022.

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