"Versatile Player Set to Reach 1.7 Million Won: The Company Building the Eyes, Brain, and Neural Network of Autonomous Vehicles [Weekend Money]"

Samsung Electro-Mechanics Secures Its Position as the "Versatile Player" in Autonomous Driving

Samsung Electro-Mechanics is attracting attention as a key beneficiary in the era of autonomous vehicles. As vehicles require cameras, high-performance semiconductor substrates, and a vast array of electronic components to perceive, judge, and operate autonomously, Samsung Electro-Mechanics stands out as a leading supplier that provides all of these essential parts.

The Trinity of Autonomous Driving: Eyes, Brain, and Ears

According to the securities industry on May 25, NH Investment & Securities maintained its 'Buy' rating on Samsung Electro-Mechanics as of May 22 and raised its target price by 13.3% to 1.7 million won. The reason is that if the autonomous driving market begins to expand in earnest, the company's optical communication, package, and component divisions could all grow simultaneously. The report described this as a "shining trinity in autonomous driving." The closing price on the previous trading day, May 21, was 1.34 million won.

When likening an autonomous vehicle to a human, the camera module acts as the "eyes," the FC-BGA (semiconductor package substrate) serves as the platform reliably connecting the "brain," and the multilayer ceramic capacitor (MLCC) functions as the "neural network" facilitating stable electrical flow. As vehicles evolve beyond merely assisting drivers to making independent decisions, the demand for these components increases, and their required performance improves. Simply put, the smarter autonomous vehicles become, the more cameras Samsung Electro-Mechanics can sell, the higher the price for substrates, and the greater the sales volume for MLCCs.

MLCC's Growing Presence in AI Servers

The growth potential for Samsung Electro-Mechanics is not limited to the automotive sector. The demand for MLCCs and FC-BGAs is also expected to surge in the artificial intelligence (AI) server market. AI semiconductors consume far more power than chips for general servers. As power consumption rises, the importance of MLCCs for stable power supply becomes even greater. There is also a significant difference between general servers and AI servers: both the quantity and capacity of MLCCs required in AI servers exceed those in conventional servers.

FC-BGA is following a similar trend. As AI accelerators and autonomous driving chips become more complex, substrates must become larger and have more layers. The report forecasts that the substrate area for graphics processing units (GPUs) will expand from 90mm × 90mm in 2023 to 230mm × 230mm by 2030. The number of substrate layers is also expected to increase from the current 12–18 layers to around 24–26 layers. In both the automotive and AI server sectors, Samsung Electro-Mechanics stands to benefit from the growing demand for "more power, more data, and higher processing performance."

NH Investment & Securities also predicts that the share of automotive electronics in Samsung Electro-Mechanics' overall sales will gradually increase. To support this, the company is expanding its production capacity in the Philippines and Mexico. In the Philippines, it has started construction of a new plant for automotive MLCCs, targeting mass production by 2027. In Mexico, the camera factory, which previously ceased operations due to tariff issues, is scheduled to resume next year. This facility aims to meet demand not only for autonomous vehicles but also for cameras used in robots.

The company's performance outlook is strong. NH Investment & Securities forecasts that Samsung Electro-Mechanics' sales will increase from 1.1314 trillion won in 2025 to 1.3378 trillion won this year, and to 1.5751 trillion won in 2027. Operating profit is expected to rise from 913 billion won in 2025 to 1.707 trillion won this year, and to 3.007 trillion won in 2027.

Jihyun Hwang, an analyst at NH Investment & Securities, explained, "As demand and supply both increase with the advancement of autonomous driving, synergies among the optical communication, package, and component divisions will be fully realized. Samsung Electro-Mechanics will demonstrate its versatility as a shining trinity in autonomous driving."

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