Samsung Electro-Mechanics Escapes Bottom... Improvement from Q1 with Expansion in Automotive Electronics (Comprehensive)

Samsung Electro-Mechanics announced that although its performance in all business sectors in the second quarter of this year fell short of the level from a year ago due to a decline in IT demand, the strategy to expand supply for automotive applications with high profitability proved effective, resulting in improved performance compared to the first quarter.

Samsung Electro-Mechanics reported on the 26th that its consolidated sales in the second quarter of this year reached KRW 2.2205 trillion, with an operating profit of KRW 205 billion. Sales decreased by 10% compared to the same period last year, and operating profit dropped by 43%. The continued decline in IT demand in the second quarter had a significant impact. However, by implementing a strategy to expand supply of high value-added automotive products, the company achieved better results than in the first quarter of this year. Compared to the first quarter, sales increased by 10% and operating profit rose by 46%.

Jang Deok-hyun, President of Samsung Electro-Mechanics

By business sector, the Component division, which includes the core product multilayer ceramic capacitors (MLCC), recorded second-quarter sales of KRW 1.0065 trillion, a 22% increase from the previous quarter. This improvement was driven by the launch of new smartphone models for the Chinese market and expanded supply of automotive and industrial products. Samsung Electro-Mechanics expects MLCC demand to increase in the third quarter due to anticipated growth in IT market demand and expansion of the automotive product market. The company plans to actively respond to market demand by increasing the operating rate of small-sized, high-capacity MLCCs for IT applications and expanding the supply of high-reliability MLCCs for automotive use.

The Optical Communication Solutions division recorded sales of KRW 776.6 billion, a 3% decrease from the previous quarter. Samsung Electro-Mechanics stated that demand declined due to the seasonal off-season effect on flagship models of major clients, but the company responded to the crisis by increasing supply of high-resolution camera modules such as folded zoom cameras for the Chinese market and automotive camera modules. In the third quarter, the company plans to expand supply of high-spec products and strengthen its response to the automotive market.

The Package Solutions division posted second-quarter sales of KRW 437.4 billion, a 10% increase from the previous quarter. Supply expanded mainly for high value-added products such as mobile application processors (AP), BGA (Ball Grid Array) for semiconductor design company ARM processors, and flip-chip ball grid array (FCBGA) for servers and automotive applications. In the third quarter, BGA supply is expected to further expand due to new model launches by major smartphone clients. Additionally, despite continued weak demand for PC products, FCBGA demand for servers and automotive applications is expected to remain solid.

Samsung Electro-Mechanics expressed optimism, stating, "Although there may be delays in demand recovery for some IT products due to the global economic slowdown in the second half, demand for related components is expected to increase due to the launch of flagship smartphone models, reduction of major component inventories, and expansion of automotive demand." The company plans to strengthen its mid- to long-term growth foundation in the second half by increasing the proportion of high value-added products such as high-spec MLCCs and flagship camera modules, as well as automotive and server products.

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