Samsung Electro-Mechanics Doubles Production Capacity of Raw Materials for Automotive MLCCs

Samsung Electro-Mechanics will expand its production facilities for MLCC raw materials in response to the growing demand for automotive laminated ceramic capacitors (MLCC). By expanding the production facilities for ceramic powder used as a raw material for MLCC, the internalization rate of core MLCC materials is expected to increase, leading to improved profitability through cost reduction.

Samsung Electro-Mechanics Busan Plant Exterior View

On the 14th, Samsung Electro-Mechanics announced plans to expand the production capacity of key MLCC raw materials such as ceramic powder and metal (nickel, copper) powder to 1,200 tons by 2025. This goal represents about a twofold increase compared to this year. Currently, the production facilities for automotive MLCC raw materials operating at the Busan plant consist of about two lines within three buildings. Both general IT and automotive MLCC raw materials are produced together, and the company plans to add two more production lines for automotive MLCC by 2025.

In this process, there is also a possibility of expanding the raw material production plant, which currently consists of three buildings. The particle size of ceramic and metal powders used in automotive MLCC is about twice as large as those used for general IT purposes, and the production process itself takes about two weeks longer than for IT use, making expansion of production facilities inevitable. A Samsung Electro-Mechanics official explained, "We plan to prioritize the internalization of raw materials for high-end MLCC products such as ultra-small, high-capacity IT and automotive MLCC," adding, "Currently, the internalization rate of MLCC raw materials is about 50%."

The reason Samsung Electro-Mechanics is accelerating the internalization of automotive MLCC raw materials is that the company is rapidly increasing the proportion of automotive MLCC in its core MLCC business, making profitability improvement through cost reduction urgent. The proportion of automotive MLCC at Samsung Electro-Mechanics rose from 14% last year to 20% in the first half of this year. This growth rate is faster than the global automotive MLCC market, which is experiencing high growth due to the spread of electric vehicles and autonomous driving. The automotive MLCC market size is expected to grow at an average annual rate of 10%, from $4.1 billion this year to $6.7 billion in 2028.

From Samsung Electro-Mechanics’ perspective as an MLCC manufacturer, it is more advantageous to increase automotive customers who can purchase larger quantities of MLCC in a single contract. Industry estimates suggest that while smartphones contain 800 to 1,000 MLCCs, electric vehicles are equipped with about 15,000. This is also why Samsung Electro-Mechanics is focusing its MLCC expansion on automotive applications. Following the Busan plant, where MLCC production is concentrated, the company will start producing automotive MLCC at the Laguna plant in the Philippines next year, which is twice the size of the Busan plant. Investment for next-generation automotive MLCC production has just begun at the Tianjin plant in China, which is three times larger than the Busan plant.

Kim Rok-ho, a researcher at Hana Financial Investment, who recently attended the '2023 Analyst Day' held at Samsung Electro-Mechanics’ Busan plant, said, "Automotive MLCC will see not only mid- to long-term demand growth but also an increase in raw material usage due to its relatively larger volume compared to IT MLCC." He added, "Internalizing core raw materials such as ceramic, nickel, and copper powders contributes not only to cost reduction but also to enhancing MLCC performance, which will become a key factor in differentiating competitiveness in the future."

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