[Click eStock] Samsung Electro-Mechanics' Aggressive Investment... Will It Create an Ultra-Gap?

Samsung Electro-Mechanics Semiconductor Package Substrate (for CPU) Product

[Asia Economy Reporter Junho Hwang] Kiwoom Securities expressed optimism about Samsung Electro-Mechanics' 1.6 trillion KRW investment in flip chip-ball grid array (FC-BGA) substrates and maintained the target stock price at 240,000 KRW. Samsung Electro-Mechanics' stock price moves according to the multilayer ceramic capacitor (MLCC) market conditions, and Kiwoom Securities believes that the company's leading capabilities and value in the packaging substrate sector have not been fully reflected.

Samsung Electro-Mechanics announced on the 21st that it will invest 300 billion KRW in its Busan plant related to the FC-BGA business. This is an aggressive investment following the 320 billion KRW investment in its Vietnam subsidiary in February and the 1 trillion KRW investment in the Vietnam subsidiary last December.

Kiwoom Securities viewed the severe supply shortage of FC-BGA and the high demand from customers as evidence of strong market needs. The decision by Samsung Electro-Mechanics to increase investment in FC-BGA is analyzed as a commitment to actively respond to market demand by advancing products such as servers and diversifying customers, while widening the gap with second-tier competitors.

FC-BGA is a high value-added substrate used in packaging for central processing units (CPU), graphics processing units (GPU), and other components. While FC-BGA is used in PCs and servers, its application is expanding to automobiles, network equipment, and data centers. Furthermore, with the development of cloud computing, high-speed communication, artificial intelligence, and autonomous driving, its usage is expected to increase significantly.

In particular, the additional investment in the Busan plant is expected to serve as a catalyst for advancing FC-BGA for server use. The price of large-area, high-layer server products is about 5 to 10 times higher than that of PC products. Through this, the Busan plant is expected to produce high-quality FC-BGA, while the Vietnam plant will focus on producing products verified for mass production, implementing a dual strategy. The Vietnam plant is scheduled to begin mass production in the second half of next year, with full sales expected in the second half of 2024.

Ji-san Kim, a researcher at Kiwoom Securities, analyzed, "FC-BGA sales are expected to leap from 740 billion KRW this year to 1.3 trillion KRW in 2024, and considering the tight supply conditions, an operating profit margin exceeding 20% can be maintained."

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