Samsung Electro-Mechanics' Q3 Operating Profit Hits "Record High" at KRW 691 Billion, Up 165% on AI Boom

Quarterly revenue reaches KRW 3.7 trillion... strong performance in both substrates and components
Expanding server FCBGA capacity and automotive camera supplies

Samsung Electro-Mechanics posted its highest-ever quarterly results, driven by a sharp surge in demand for components for artificial intelligence (AI) data centers.

Samsung Electro-Mechanics announced on Wednesday that it recorded consolidated revenue of KRW 3.7633 trillion and operating profit of KRW 691 billion in the third quarter. Revenue rose 30% year on year and 9% quarter on quarter. Operating profit jumped 165% year on year and 57% quarter on quarter. Both revenue and operating profit were quarterly records.

A view of Samsung Electro-Mechanics' Suwon site. Samsung Electro-Mechanics

High-value-added AI-related products led the growth in results. The Components Division increased sales across all applications, including servers and networks. Supplies of package substrates (FCBGA) for AI data centers and automotive applications expanded. Deliveries of camera modules for next-generation platforms at global electric vehicle makers also contributed to growth. Strength in high-spec components for AI data centers and automotive components for autonomous driving is expected to continue into the fourth quarter of this year.

By business division, the Components Division posted the strongest growth. Its third-quarter revenue was KRW 1.883 trillion, up 36% year on year and 14% quarter on quarter. As performance requirements for graphics processing units (GPUs) used in AI servers increased, demand grew for multilayer ceramic capacitors (MLCCs) with higher capacitance and smaller form factors.

MLCCs are key passive components that temporarily store electricity in electronic circuits and then provide a steady supply of power to semiconductors and other components as needed. The industry calls the phenomenon in which the capacitance required per chipset doubles every year the "AI MLCC law."

The Package Solutions Division posted third-quarter revenue of KRW 939 billion, up 58% year on year and 22% quarter on quarter. Sales of central processing units (CPUs) for data centers, AI accelerators, and network substrates surged. Shipments of high-performance substrates for autonomous vehicles also supported revenue. Samsung Electro-Mechanics will expand production capacity at its sites in time to meet fourth-quarter demand.

The Optical Solutions Division recorded third-quarter revenue of KRW 941.3 billion. This was down 9% from the previous quarter but up 3% year on year. Revenue exceeded the year-earlier figure thanks to the launch of mass production of new 200-megapixel folded-zoom cameras and increased supplies for foldable smartphones. In the fourth quarter, Samsung Electro-Mechanics will begin full-scale mass production of camera modules for a strategic customer's next flagship smartphone. It also plans to further expand supplies of automotive cameras in line with the commercialization of autonomous driving and humanoid robots.

Samsung Electro-Mechanics plans to continue long-term agreements (LTAs) with major big tech companies in the fourth quarter while expanding supplies of high-value-added products for electric vehicles and autonomous driving. Recently, after receiving investment from Nvidia, it decided to establish dedicated production lines for next-generation package substrates at its domestic manufacturing sites in Sejong and Busan. Using the expanded facilities, Samsung Electro-Mechanics will supply package substrates for AI semiconductors to Nvidia under long-term contracts starting this year.

"Entering the supply chain of a top-tier global customer is significant because it means our technological capabilities and mass-production stability have both been recognized," said Kim Min-kyung, a researcher at Hana Securities. "If the share of supplies to Nvidia increases alongside the expansion of new production capacity at the Sejong and Busan sites, Samsung Electro-Mechanics' flip-chip ball grid array (FCBGA) business will reach a new level not only in scale but also in product mix and profitability."

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