[Click e-Stock] "Samsung Electro-Mechanics Expected to Post Strong Q3 Results...MLCC Supply Shortage"

Strong Demand Driven by AI Expansion
Potential for Price Increases Amid Supply Constraints

Samsung Electro-Mechanics is expected to post third-quarter results this year that surpass market forecasts (consensus). This is attributed to increased demand and enhanced competitiveness in multilayer ceramic capacitors (MLCCs) and next-generation semiconductor substrates such as flip-chip ball grid array (FC-BGA).

On September 1, Daishin Securities maintained its target price for Samsung Electro-Mechanics at 200,000 won and its investment opinion as 'Buy,' citing these factors. The closing price on the previous trading day was 160,500 won.

The company’s third-quarter operating profit was revised upward to 250.7 billion won, up 6.2% from the previous estimate of 236 billion won and 5.0% higher than the consensus of 238.7 billion won. Daishin Securities expects sales to be driven by high value-added products in both MLCC and FC-BGA segments. Sales are projected to reach a record high of 2.85 trillion won on a quarterly basis. By 2026, the company is also expected to achieve an operating profit of 1 trillion won, driven by an increased proportion of high value-added products and higher profitability in MLCCs.

The boom in MLCCs is cited as a major factor. In some areas, there is even a possibility of supply shortages by 2026. The utilization rate has already reached 96% in the first quarter and 98% in the second quarter of this year. It is expected to remain at 96-98% in the second half of the year. As the electrification and autonomous driving applications in automobiles expand, the proportion of electric vehicles increases, leading to higher usage of high-capacity MLCCs.

Power consumption is rising in data centers and servers, resulting in additional demand. If replacement demand for AI devices occurs in the smartphone and PC sectors next year, demand for ultra-small and high-capacity MLCCs could increase further. In this scenario, supply may fall short of demand, potentially driving up prices.

In the FC-BGA segment, supply for AI accelerators is increasing. The share of servers and data centers is expected to expand. Starting in the third quarter, FC-BGA sales are projected to account for over 50% of the package solution segment, contributing to overall growth and improved profitability. The recent 23 trillion won AI6 semiconductor supply contract between Samsung Electronics and Tesla is also seen as a positive factor.

For camera modules, the company expects replacement demand from foldable phones and diversification of sales in areas such as autonomous driving and humanoids. Park Kangho, a researcher at Daishin Securities, stated, "Currently, it is difficult to adopt high-resolution cameras in foldable phones, but as devices become slimmer, the competitive advantage of folded-zoom cameras and gradual adoption of high-resolution cameras will drive differentiation." He added, "There is also growing potential for collaboration in next-generation robotics, including humanoid robots, with Boston Dynamics, the robotics affiliate of Hyundai Motor Group."

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