Samsung Electro-Mechanics, Positive Performance Outlook for This Year... CAPEX Maintained at Last Year's Level (Comprehensive)

Q4 Operating Profit Increased by 9.1% to 110.4 Billion KRW
Last Year's Sluggish Performance Expected to Recover This Year
MLCC Demand Response Announced... Expectations for the Automotive Electronics Market
Full-Scale Mass Production of New Business Parts Expected Next Year

Samsung Electro-Mechanics increased its performance in the fourth quarter of last year compared to the same period the previous year, influenced by the launch of flagship smartphones. This year, demand in set fields such as PCs and servers is also showing signs of recovery, along with the added effect of generative artificial intelligence (AI), leading to expectations of improved performance compared to last year. Samsung Electro-Mechanics announced plans to maintain its capital expenditure (CAPEX) at last year's level.

Samsung Electro-Mechanics Suwon Plant View / Photo by Samsung Electro-Mechanics

Samsung Electro-Mechanics disclosed on the 31st that its consolidated sales in the fourth quarter of last year reached 2.3062 trillion KRW, a 17.2% increase compared to the same period last year. Operating profit for the same period rose 9.1% to 110.4 billion KRW. The company explained, "This is the result of expanding the supply of high-performance camera modules such as multilayer ceramic capacitors (MLCC) for smartphones and folded zoom modules, driven by the launch of new smartphone models."

By business segment, sales in the Components division (975.1 billion KRW) and Optical Communication Solutions division (888.4 billion KRW) increased by 17% and 36%, respectively, compared to the same quarter last year. Sales in the Package Solutions division decreased by 8% to 442.7 billion KRW due to weak demand caused by year-end inventory adjustments.

Annual sales last year were 8.9094 trillion KRW, down 5.5% from the previous year, and operating profit fell 45.9% to 639.4 billion KRW. Although performance was sluggish last year, it is expected to improve this year.

During the conference call held on the same day, Samsung Electro-Mechanics stated, "Demand in set fields such as PCs, smartphones, and servers is expected to recover compared to the previous year, and the generative AI effect will increase demand for high value-added products such as MLCCs and package substrates." They also explained, "With the automotive market continuing its high-growth trend, our company's performance is expected to grow compared to last year."

They further forecasted, "Despite seasonal weak demand in IT sets in the first quarter, overall sales are likely to grow quarter-on-quarter due to the launch of new flagship smartphones by major domestic and international customers and expanded supply for industrial and automotive applications."

In the MLCC business, sales are expected to increase as demand recovers in major applications this year and new applications such as AI servers emerge. Samsung Electro-Mechanics plans to expand production capacity (CAPA) in a timely manner by increasing production utilization rates in line with rising MLCC demand.

The outlook for the automotive MLCC market is also positive this year. Samsung Electro-Mechanics stated, "Although there are factors slowing the growth rate of electric vehicles, significant inventory depletion by customers this year is expected to result in higher growth levels than the previous year," adding, "We will continue to achieve sales growth exceeding market growth by expanding automotive production capacity and diversifying bases to improve supply stability."

This year’s overall CAPEX is expected to be similar to last year’s level. Samsung Electro-Mechanics reduced CAPEX last year due to decreased demand in the front-end market. However, investments for responding to the automotive MLCC market will increase this year. The company explained, "We will flexibly execute investments focusing on high-growth areas such as automotive, servers, and AI."

Samsung Electro-Mechanics also detailed its new business plans related to future core components, which were announced earlier this month at the world's largest electronics and IT exhibition, CES 2024.

The company stated, "Silicon capacitors will be mass-produced for high-performance computing package substrates as early as the end of this year or in 2025, with plans to expand the lineup," adding, "Hybrid lenses are also being developed with a goal of mass production in 2025." They continued, "Glass substrates, small mobile solid-state batteries, and solid oxide electrolyzer cells (SOEC) are under development with a target for mass production in 2026."

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