[Click eStock] "Samsung Electro-Mechanics Begins to Benefit from AI"

On October 20, Daishin Securities announced that it has begun to see Samsung Electro-Mechanics benefiting from the development of the artificial intelligence (AI) industry, raising its target stock price from 225,000 won to 260,000 won.

Park Kangho, a researcher at Daishin Securities, explained, "The main sources of revenue are shifting from traditional IT devices such as smartphones and PCs to AI and automotive electronics," adding, "We expect a full-fledged increase in profits starting from the third quarter of this year."

He continued, "In the substrate business, sales of flip-chip ball grid array (FC-BGA) products for AI applications are increasing, leading to higher profitability. The expansion of the operating rate at the Vietnam plant is reducing fixed costs, which is also contributing to additional profit growth."

He emphasized, "Since the second quarter of this year, sales of FC-BGA for AI accelerators have been on the rise, with supply to Amazon and AMD increasing."

Park further analyzed, "AMD is expanding its supply of AI accelerators to major tech companies such as Oracle, and this will lead to a long-term increase in Samsung Electro-Mechanics' FC-BGA sales for AI applications." He added, "We expect that FC-BGA products for AI accelerators, which started with Amazon and AMD, will be additionally supplied to Google, Meta, and Broadcom next year. The sales proportion of FC-BGA in the substrate business is expected to exceed 50% for the first time this year."

He went on to say, "Next year, the company also plans to expand its glass substrate business. As orders for AI accelerators from major tech companies such as Nvidia, AMD, and Broadcom increase, the importance of advanced stacking technology has grown." He also emphasized, "A technological shift is underway to replace the core area material from plastic to glass during the stacking process. The success of the glass substrate business can be interpreted as Samsung Electro-Mechanics capturing the high market share and profitability currently held by Japanese PCB companies."

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