Samsung Electro-Mechanics Set for Record-High Results Despite Falling Exchange Rate... AI Components Drive Growth

Third-Quarter Operating Profit Forecasts Raised by Securities Analysts
Growing Demand for MLCCs and FC-BGAs for AI Servers
Supply Shortages Expected to Boost Product Prices and Profitability

Samsung Electro-Mechanics is expected to deliver third-quarter results exceeding market expectations, driven by expanding demand for high-value-added components for AI (artificial intelligence) servers and improved profitability, despite a decline in the won-dollar exchange rate.

According to financial information provider FnGuide on the 29th, the consensus for Samsung Electro-Mechanics' third-quarter operating profit stands at around 600 billion KRW. However, recent reports from securities firms indicate even higher expectations. KB Securities forecast Samsung Electro-Mechanics’ third-quarter operating profit at 660.1 billion KRW, while iM Securities projected 650 billion KRW. If the market forecasts are correct, third-quarter operating profit is expected to reach an all-time high.

The recent decline in the won-dollar exchange rate is a burden for Samsung Electro-Mechanics, given its high export ratio. However, the industry believes that the increase in demand for high-value-added components due to expanded AI server investments, improvements in product mix, and supply shortages of some products will largely offset the impact of currency fluctuations.

In particular, multilayer ceramic capacitors (MLCC) are expected to benefit from the expansion of the AI server market. AI servers require more MLCCs and higher capacities than standard servers. Moreover, since power stability and high reliability are essential, demand is rising for high-capacity and high-reliability products.

Samsung Electro-Mechanics server FCBGA (Flip Chip Ball Grid Array). Samsung Electro-Mechanics.

The ongoing supply shortage of high-value-added MLCCs is enhancing not only shipment volumes but also the possibility of improved prices and profitability. Samsung Electro-Mechanics is securing stable volumes by expanding long-term supply agreements (LTA) for MLCCs dedicated to AI servers with major global customers.

Package substrates such as FC-BGA (Flip Chip Ball Grid Array) are also expected to benefit from the increasing sophistication of AI semiconductors. As the performance of AI accelerators and semiconductors for data centers advances, the package size and number of layers increase—leading to greater demand for large-area, high-layer-count FC-BGA products. As a result, market expectations are rising for improvements in their prices and profitability. Recently, securities firms have projected that Samsung Electro-Mechanics’ FC-BGA business will see profitability gains thanks to supply shortages and a higher proportion of high-value-added products.

Industry experts indicate that the improvement in Samsung Electro-Mechanics’ results is significant not merely because of increased shipment volumes but also due to a shift in its business structure towards more high-value-added products for AI servers. This expansion of higher value-added products, improvements in product mix, high utilization rates, and price hikes caused by supply shortages have combined to reduce the company’s exposure to the negative effects of currency fluctuations.

The expansion of long-term supply agreements is also cited as a factor enhancing performance visibility over the mid- to long-term. By signing long-term deals with customers in line with expanding AI server investments, Samsung Electro-Mechanics can secure future order volumes in advance. According to securities firms, as Samsung Electro-Mechanics is moving to secure a significant portion of its production capacity for 2027 through long-term contracts, the company’s future performance visibility is expected to increase even further.

A Samsung Electro-Mechanics official stated, “With the growth of the AI server and data center market, demand for high-value-added MLCCs and package substrates continues to rise. We plan to respond proactively to market demand with a focus on high-performance, high-reliability products and to strengthen our differentiated competitiveness.”

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