Samsung Electro-Mechanics Q2 Operating Profit Down 41.4%... Decrease in Camera and Communication Module Supply
Decline in MLCC Sales Prices Due to COVID-19 Crisis
Expectations for New Smartphones and 5G Expansion
[Asia Economy Reporter Dongwoo Lee] Samsung Electro-Mechanics announced on the 28th that its operating profit for the second quarter of this year was 96 billion KRW, a decrease of 41.4% compared to the same period last year.
During the same period, sales were 1.8122 trillion KRW, down 5.5% from the same period last year. Net profit fell 85.1% to 45.7 billion KRW.
Samsung Electro-Mechanics stated that due to the impact of the COVID-19 pandemic and seasonal off-season effects, the supply of camera and communication modules decreased, resulting in a decline in performance compared to the previous quarter. Operating profit decreased due to a drop in the average selling price of multilayer ceramic capacitors (MLCC) compared to the same period last year and weak mobile demand caused by COVID-19.
In the second half of the year, with the continued impact of COVID-19, camera module performance is expected to fall short of the same period last year, but improvement is anticipated compared to the second quarter due to the expansion of high-spec camera supply for flagship new models. MLCC, semiconductor package substrates, and rigid-flexible printed circuit boards (RFPCB) plan to expand supply due to new model launches by major clients, the spread of 5G (5th generation communication) devices, and increased demand for PCs and gaming consoles.
In the components division, despite the impact of the lockdown in the Philippines due to COVID-19, MLCC sales increased, but the supply decrease of electronic components caused the division's sales to decline by 2% compared to the previous quarter. However, due to increased MLCC supply for non-face-to-face service-related PCs, servers, and gaming consoles, sales reached 839.6 billion KRW, a 7% increase compared to the same period last year.
In the second half, growth in the small-sized, high-capacity MLCC market is expected due to new flagship smartphone launches and the expansion of 5G adoption, and demand for PC and gaming console products is also expected to remain solid.
The module division recorded sales of 604.8 billion KRW, down 38% from the previous quarter and 27% from the same period last year, due to decreased supply of camera modules and communication modules to strategic clients.
From the third quarter onward, smartphone demand recovery compared to the same period last year is expected to be uncertain due to the impact of COVID-19. Plans are in place to expand sales of high-spec cameras equipped with high-resolution and optical zoom functions and to initiate new supply of 5G antenna modules.
Sales in the substrate division for the second quarter decreased 4% compared to the previous quarter due to reduced supply of RFPCBs for organic light-emitting diode (OLED) applications. However, sales increased 20% compared to the same period last year to 367.8 billion KRW due to expanded sales of package substrates for PC CPUs and graphics DRAM.
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In the second half, RFPCB sales are expected to expand with the launch of new flagship smartphones. Supply of 5G substrates such as antenna and system-in-package (SiP) will also be expanded.
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