[Click e Stock] "Samsung Electro-Mechanics, Long-Term Boom in Package Substrates Expected... Challenging Record High 3Q Performance"

[Asia Economy Reporter Song Hwajeong] Kiwoom Securities maintained a 'Buy' investment rating and a target price of 270,000 KRW for Samsung Electro-Mechanics on the 30th, expecting growth as the package substrate boom continues long-term and forecasting that the third-quarter earnings this year will reach an all-time high.

Kim Jisan, a researcher at Kiwoom Securities, said, "We have once again raised Samsung Electro-Mechanics' third-quarter operating profit estimate to 446 billion KRW, a 45% increase compared to the same period last year," adding, "This is a performance that significantly exceeds the market consensus (406.9 billion KRW) and will challenge the highest-ever earnings."

All three business divisions are showing strong performance, indicating good quality of profits. The multilayer ceramic capacitor (MLCC) segment is expected to continue its market share growth due to strong industrial demand in servers and network equipment, areas where Samsung Electro-Mechanics has strengths, and the full-scale operation of the Tianjin plant in China. Researcher Kim explained, "In the COVID-19 environment, the ripple effects from production disruptions at competitors such as Japan's Murata and Taiyo Yuden are adding to the benefits." The package substrate segment is expected to realize unprecedented profitability as price increases centered on flip chip ball grid array (FC-BGA) and flip chip chip scale package (FC-CSP) take full effect. The camera module segment is anticipated to achieve better-than-expected results based on the success of the main customer's new foldable phone, easing of production disruptions, and expanded shipments of the Galaxy A series.

It is expected that the package substrate boom caused by FC-BGA supply shortages will continue long-term, suggesting a need to reevaluate Samsung Electro-Mechanics, a leading company in this field. As processors such as server central processing units (CPUs) become larger, the large-area trend of FC-BGA is progressing rapidly, and next-generation package technologies like interposers and EMIB for multi-chip integration are evolving, increasing manufacturing difficulty. On the demand side, the mid- to long-term outlook is bright for high-performance processors used in cloud computing, high-speed communication, artificial intelligence (AI), and autonomous driving. Next year, Windows 11 and new CPUs are expected to stimulate PC replacement demand, and the expansion of a new substrate market combining FC-BGA and FC-CSP led by Apple is also an opportunity factor. Researcher Kim analyzed, "In contrast, suppliers are limited, and recently equipment procurement has become difficult, requiring the industry to adjust the pace of capacity expansion, so a long-term supply-demand imbalance will persist. Samsung Electro-Mechanics is actively responding to market demand along with diversifying its customer base and is attempting to enter the high-value-added server FC-BGA market, which will provide a significant opportunity for quantitative and qualitative growth."

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