Global MLCC Manufacturers Face Production Disruptions Due to COVID-19... Samsung Electro-Mechanics Anticipates Market Share Growth

World's No.1 Murata and Major Companies Face Prolonged Factory Shutdowns... Samsung Electro-Mechanics Maintains Steady Production
MLCC Demand Inevitably Slows in Q2 Due to Global COVID-19 Spread

[Asia Economy Reporter Ki-min Lee] Despite the COVID-19 pandemic, the domestic multilayer ceramic capacitor (MLCC) manufacturer Samsung Electro-Mechanics is expected to post first-quarter results this year similar to those of last year. In particular, it is anticipated to have a positive impact on Samsung Electro-Mechanics' global market share, as the company did not halt its factories even while major overseas competitors experienced shutdowns for certain periods.

According to industry sources on the 15th, Samsung Electro-Mechanics is expected to have defended its first-quarter performance well due to volume secured from its major customers. MLCCs are components that regulate the flow of current in electronic devices and prevent electromagnetic interference. Typically, 800 to 1,200 MLCCs are used in smartphones, 2,000 in TVs, 10,000 to 15,000 in automobiles, and 16,000 in 5G base stations. Samsung Electro-Mechanics holds about a 22% share of the MLCC market, ranking second worldwide.

According to financial information provider FnGuide, Samsung Electro-Mechanics is projected to record sales of 2.0261 trillion KRW and an operating profit of 153.7 billion KRW in the first quarter of this year. Although sales and operating profit are expected to decrease by 4.9% and 19.23%, respectively, compared to the first quarter of last year, the industry analyzes that MLCC demand actually improved by about 5% compared to the fourth quarter of last year.

At the beginning of this year, with increased demand for MLCCs for data servers and smartphones coinciding with the spread of COVID-19, global companies halted production for a significant period, prompting customers to proactively secure supply volumes amid concerns over supply shortages. Earlier, Taiwanese MLCC manufacturers Yageo and Walsin Technology stopped their production lines in China in early February due to COVID-19. Additionally, Murata Manufacturing, which holds about 40% of the MLCC market share, also faced disruptions in its Chinese factories in February due to COVID-19. Furthermore, when a COVID-19 case was confirmed at its main production base in Fukui Prefecture, production lines were suspended for three days from the 5th to the 7th of this month. Murata Manufacturing's MLCC production capacity is about 120 to 130 billion units per month, with production in Japan (60%), China (30%), and the Philippines (10%).

Accordingly, the industry expects Samsung Electro-Mechanics to benefit from this windfall and see its market share rise. Samsung Electro-Mechanics operates MLCC production lines in Busan, Tianjin (China), and Calamba (Philippines). Although production volume adjustments were made amid the COVID-19 situation, the company did not stop factory operations. An industry insider said, "Domestic companies likely gained relatively more influence in negotiations over volume and pricing with their clients."

However, demand for smartphones, which account for about 35% of total MLCC demand, and automotive components, which account for about 25%, is expected to slow down significantly. Voices from inside and outside the industry are calling for thorough preparation for the market situation in the second quarter. Kyung Kye-hyun, CEO of Samsung Electro-Mechanics, recently stated through an internal broadcast, "COVID-19 could seriously impact our business this year," and urged, "We must respond as if preparing for war." He added, "With COVID-19 bringing about major social changes such as remote work becoming the new normal, we must establish various scenarios and prepare to adapt effectively when the upturn comes."

This content was produced with the assistance of AI translation services.