Samsung Electro-Mechanics Soars in Operating Profit with 5G and Automotive Electronics Wings... Expands Facility Investment This Year (Comprehensive)

[Asia Economy Reporter Suyeon Woo] Thanks to the favorable conditions in front-end industries such as 5G, smartphones, and automobiles, Samsung Electro-Mechanics' operating profit in the fourth quarter of last year grew by more than 70% compared to the same period last year. This year, the company plans to actively respond to market demand by expanding capital investment compared to the previous year.

On the 27th, Samsung Electro-Mechanics announced that it recorded consolidated sales of 2.0864 trillion KRW and operating profit of 252.7 billion KRW in the fourth quarter of last year. This represents a 17% increase in sales and a 73% increase in operating profit compared to the same period last year. For the full year 2020, sales reached 8.2087 trillion KRW and operating profit 829.1 billion KRW, growing 6% and 12% respectively compared to the previous year.

Recently, sales of high value-added products such as MLCCs and package substrates have increased due to the expansion of the 5G market, significantly improving performance compared to the same period last year. However, it was added that performance declined compared to the previous quarter due to factors such as year-end inventory fixation causing demand reduction and exchange rates.

Samsung Electro-Mechanics is currently operating all factories at full capacity in the MLCC sector, and expects MLCC orders to increase from the first quarter this year, focusing on smartphones, PCs, TVs, networks, and automotive components. At the earnings conference call, a Samsung Electro-Mechanics IR representative stated, "In particular, orders for automotive MLCCs are expected to increase by more than 20% compared to the previous year."

As the market supply and demand situation tightens and price increases for key components such as MLCCs are being discussed, Samsung Electro-Mechanics has taken a stance to implement a flexible pricing policy. The IR representative said, "Regarding component price increases, we plan to respond flexibly according to future market supply and demand and industry trends."

Including the new plant in Tianjin, China, the company has steadily expanded capital investment and set this year's investment plan more aggressively than last year. The IR representative said, "To respond to the favorable conditions in front-end industries such as smartphones and automobiles and to 5G this year, we plan to expand capital investment compared to the previous year," adding, "We will actively respond to customer demand by expanding capital investment beyond market growth."

He continued, "The initial equipment investment setup for the new plant in Tianjin, China has been completed, and production stability is being verified," adding, "We will efficiently utilize the new plant to respond to the market."

Looking at sales by division, the component division's fourth-quarter sales recorded 964.5 billion KRW, down 2% quarter-on-quarter due to exchange rate effects, although shipments of MLCCs for Chinese smartphones and automotive use increased. Samsung Electro-Mechanics expects that this year, with the expansion of the 5G smartphone market and increased demand for untact-related components such as PCs and servers, as well as growth in the automotive market, supply of high value-added products will increase.

The module division posted sales of 564 billion KRW, down 29% quarter-on-quarter due to reduced supply of camera modules for flagship smartphones caused by seasonal off-season effects. Samsung Electro-Mechanics plans to secure competitiveness with differentiated technologies such as optical zoom and slimming in line with the trend toward high-performance camera modules, and to expand sales by continuously supplying mid- to high-end smartphone products.

The substrate division's fourth-quarter sales grew 23% quarter-on-quarter to 557.9 billion KRW. Performance improved as supply of high value-added package substrates for mobile APs and CPUs and OLED RFPCBs expanded. This year, the substrate business plans to increase profitability by expanding supply of high value-added package substrates for 5G, automotive, and thin CPU applications amid expectations of semiconductor market improvement.

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