LG Innotek and Newflex Stand to Benefit
The author is an analyst of NH Investment & Securities. He can be reached at kyuha.lee@nhqv.com. -- Ed.
Global IT players are to start rolling out XR products in earnest in 2H22. Strong sales of Meta Quest 2 are creating a virtuous cycle of VR content expansion. With the launch of Apple’s XR device to come sooner than expected, we draw attention to potential beneficiaries.
XR product releases to hit full force in 2H22, including Meta XR and 2nd-gen Sony PSVR
Global IT players are to start launching extended reality (XR) devices in earnest in 2H22. In particular, in the virtual reality (VR) market, where Meta (Oculus) Quest 2 is representative, the number of users is rapidly increasing, creating a virtuous cycle of content expansion. Related domestic companies LG Innotek and Newflex stand well situated to benefit.
Following on the heels of the sensational popularity of Meta Quest 2 in 2021, Meta Platforms is likely to release Project Cambria, its first XR device, in 3Q22. Convenience and hardware specifications should boast notable improvement over Quest 2, and accompanying content offerings are to be more diverse, leading to brisk sales.
Meanwhile, Sony recently unveiled its PSVR2 model, aiming for a 2H22 release. The device is a PlayStation second-generation VR headset representing the first upgrade since the release of the previous version six years ago. Hardware performance is believed to be significantly improved compared to the previous version. Also boding well, upcoming VR-only games are to be more diverse than past titles, and console gamers are expected to enter the VR market.
Apple XR to be released as early as 2H22
The most anticipated device is Apple’s new hardware, a XR device. The price tag is predicted to be around US$2,000~3,000, loftier than that for existing XR products. That said, demand should be sufficient considering the new device’s unrivaled hardware performance. The latest release forecast is for early 2023, but a release in 2H22 is not out of the question.
If so, LG Innotek and Newflex stand to be the chief beneficiaries. In detail, LG Innotek supplies 3D sensing modules and camera modules (core components) to major XR device makers, and Newflex supplies (by way of a Chinese client) FPCB boards for camera modules to Meta Platforms. With LG Innotek and Newflex set to deliver record-high earnings in 2022, and with both firms showing attractive valuations, we anticipate mid/long-term uptrends in their share prices.