[Click eStock] "Samsung Electro-Mechanics, Possible 3Q Overgrowth"

Strong Performance in MLCC and Semiconductor Substrates
Rising Expectations for Growth in High-Resolution Camera Sensors and Camera Modules

[Asia Economy Reporter Minwoo Lee] Samsung Electro-Mechanics is expected to post third-quarter earnings that exceed expectations. The growth in multilayer ceramic capacitors (MLCC) and semiconductor substrate performance is seen as the main driver.

On the 23rd, Hyundai Motor Securities forecasted that Samsung Electro-Mechanics would achieve third-quarter sales of 2.1929 trillion KRW and an operating profit of 274.3 billion KRW. Compared to the same period last year, sales decreased by 3.6%, but operating profit increased by 52%.

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In the case of MLCC, both shipment volume and average selling price (ASP) improved compared to the previous quarter, supported by an increased proportion of ultra-small and high-capacity products for 5G smartphones. The substrate division is also estimated to have improved performance due to increased shipments of Samsung Electronics smartphones and higher semiconductor substrate sales in the foundry segment. However, sales of 'FC-BGA' related to North American CPU transactions appear to have declined due to weakened PC demand.

Geunchang Noh, a researcher at Hyundai Motor Securities, explained, "In the third quarter, smartphone demand improved significantly compared to the previous quarter, while server and PC demand deteriorated. MLCC has the highest exposure to smartphones, and the price premium of ultra-small and high-capacity product groups compared to general-purpose products also had a positive effect."

As the world's second-largest MLCC manufacturer, considering its strong competitiveness in ultra-small and high-capacity products and the expansion of automotive MLCC production capacity, the excess growth of the company's MLCC division linked to 5G and future car demand was already anticipated. Additionally, as Samsung Electronics significantly reduces pixel pitch and leads the market for high-resolution CMOS image sensors (CIS) with over 108 million pixels, Samsung Electro-Mechanics' co-growth in the camera module sector, where it holds competitiveness, is expected to materialize. Researcher Noh predicted, "Even if 500 million and 600 million pixel CIS products are released, the importance of core camera module technologies such as lenses will increase to enhance user convenience," adding, "Value creation related to this will proceed simultaneously."

Against this backdrop, Hyundai Motor Securities has given Samsung Electro-Mechanics a 'Buy' investment rating with a target price of 167,000 KRW. The closing price on the previous day was 135,000 KRW.

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