The Only Company with Top ABF and MLCC Technology: Samsung Electro-Mechanics [Click e-Stock]

Meritz Securities Raises Target Price
from 2.1 Million Won to 2.4 Million Won

On June 11, Meritz Securities maintained its "Buy" investment rating on Samsung Electro-Mechanics and raised its target price from 2.1 million won to 2.4 million won.

Seungsoo Yang, a researcher at Meritz Securities, stated, "As both Ajinomoto Build-up Film (ABF) substrates and multilayer ceramic capacitors (MLCCs) enter a structurally favorable phase, Samsung Electro-Mechanics stands as the only company with world-class technological competitiveness in both areas. This justifies the application of a premium multiple."

Researcher Yang explained that the company's technological capabilities, combined with current market conditions, are driving up the stock price. First, ultra-small and ultra-high-capacity MLCCs for artificial intelligence (AI) servers require a high number of layers within a limited area, making them extremely difficult to manufacture and restricting the number of suppliers. Consequently, while demand is structurally increasing, particularly for AI servers, the limited number of suppliers continues to create a tight supply environment, leading to a rapidly growing consensus across the entire value chain regarding intensified supply shortages. Yang further noted that the expansion of long-term agreements (LTA) for AI server MLCCs could become a key variable, potentially pushing the MLCC price increase cycle beyond the levels seen in 2017-2018.

Yang also assessed that, with a clear supply-demand imbalance in the ABF substrate market and major competitors planning to raise prices by around 15-20% from the second quarter, Samsung Electro-Mechanics is highly likely to participate in these price increases as well.

Additionally, the recently secured large-scale orders for silicon capacitors (Si-Cap) suggest that these components are likely to become core parts in next-generation packaging. Currently, Samsung Electro-Mechanics is the only company capable of supplying them in large volumes. Researcher Yang added, "Future consecutive contracts could serve as a key basis for justifying Samsung Electro-Mechanics' differentiated premium."

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