Why Samsung Electro-Mechanics Shareholders Are Watching a Japanese Rival's "Price Tag" [Click e Stock]

MLCC price increases for direct shipments could boost profits
Focus on Japan's Murata, the industry leader, reporting on the 30th
Need to confirm whether AI orders translate into actual demand

Shareholders of Samsung Electro-Mechanics may want to keep an eye on the earnings announcement from a Japanese company this week. The company in focus is Murata, an electronic components manufacturer. Its results could offer clues about Samsung Electro-Mechanics' prospects. The key question is whether the industry as a whole is gaining the power to raise prices for multilayer ceramic capacitors (MLCCs), small components used in AI servers.

MLCCs temporarily store electricity and supply it steadily to semiconductors. They play a supporting role, helping provide power behind AI chips. As the AI server market grows, attention is also turning to the performance and pricing power of companies that make these small components.

On October 28, Samsung Electro-Mechanics said its operating profit for the third quarter of this year rose 165.5% year over year to KRW 691 billion, a record high for any quarter. Attention is now shifting to the next quarter. Ko Eui-young, an analyst at iM Securities, said the key factor will be how widely MLCC price increases spread.

Samsung Electro-Mechanics raised prices for MLCCs sold through distributors by 20-30% in June and August. However, sales through distribution channels account for only around 10% of its MLCC revenue. The larger market is direct shipments to customers, which make up around 80% of sales. Price increases in this segment would have a greater impact on profit growth.

Market research firm TrendForce forecast that Samsung Electro-Mechanics would raise prices in the fourth quarter by 25-30% for general-purpose products and by 10-20% for AI server products sold directly to customers. The timing of these increases and the range of customers affected are expected to be key points to watch.

The report emphasized that developments at Murata, the industry leader, deserve particular attention. Murata, which will announce its results on October 30, has so far taken a cautious approach to price increases. According to the report, the company said in July that it would consider raising prices through distribution channels first, but distributor prices remained flat through mid-October. If Murata officially announces price increases for direct shipments this time, or raises its full-year earnings outlook to reflect them, expectations could grow that Samsung Electro-Mechanics' price increases will not be a one-off, the report said.

The ultimate justification for raising prices is demand. In July, Murata raised its forecast for annual sales growth of data center MLCCs from 85-90% to more than 100%. As orders are confirmed as actual demand, manufacturers may gain more leverage in price negotiations. That is why the report recommended monitoring both capacity expansion plans and the outlook for AI server demand next year.

Analyst Ko forecast a significant improvement in Samsung Electro-Mechanics' results in the fourth quarter of this year. "The fourth quarter is typically an off-season, but results are expected to improve significantly from the previous quarter, supported by the effects of price increases in distribution channels and a higher share of premium AI server products," he said. "Starting in the first quarter of next year, the improvement is expected to be even greater as sales begin to reflect long-term supply agreement (LTA) volumes at higher prices."

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