'2.27 Million Won to 860,000 Won': This Stock Sheds 62% in 5 Months, Falling Harder Than Samsung Electronics and SK hynix

From a June peak of 2.27 million won to the 860,000-won range

Investor sentiment cools amid concerns over a slowdown in AI investment

Earnings improve despite the share-price decline

Samsung Electro-Mechanics’ stock, which surged amid the artificial intelligence (AI) semiconductor boom, has recently continued its steep decline. The drop is believed to reflect a sharp pullback in investor sentiment after the stock rallied in a short period on expectations of growing demand for AI-related components.

On November 13, Samsung Electro-Mechanics shares closed down 2.71% from the previous trading day at 862,000 won. That was about 62% below the intraday high of 2.27 million won set on June 19. The stock, which had once topped 2 million won, fell into the 800,000-won range in five months.

Samsung Electro-Mechanics’ decline was steeper than those of Samsung Electronics and SK hynix. Comparing their June peaks with their closing prices on November 13, Samsung Electronics fell about 43% and SK hynix about 58%. Samsung Electro-Mechanics saw a larger drop than either company.

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

Samsung Electro-Mechanics began the year trading at around 270,000 won and surged as investors viewed it as a beneficiary of growth in the AI industry. Expectations that demand would rise for multilayer ceramic capacitors (MLCCs) and semiconductor package substrates (FCBGAs) used in AI data centers drove the stock higher. In particular, expectations of expanded supply of high-value components for high-performance AI servers attracted investor interest.

However, sentiment has shifted recently amid the possibility of tighter regulations on AI data center construction in the United States and growing questions about the profitability of AI investments. Concerns have spread that a slowdown in data center investment could also affect earnings prospects for Samsung Electro-Mechanics, a supplier of related components. Growing concerns about regulation of the AI industry following the U.S. midterm elections have also weighed on investor sentiment toward Korean semiconductor and electronic component stocks overall.

Despite the share price decline, Samsung Electro-Mechanics’ results are improving. In the third quarter of this year, the company recorded revenue of 3.76 trillion won and operating profit of 691 billion won. Revenue rose 30% and operating profit increased 166% from the same period last year. The gains resulted from improved profitability as demand for components used in AI servers increased.

Some investors nevertheless remain positive about the company’s medium- to long-term growth prospects. Supply shortages of key AI-related components such as MLCCs and FCBGAs are continuing, and analysts expect related demand to grow next year as well. Some brokerages have maintained high target prices, citing price increases for high-value products and expanded supply contracts.

How much of the AI market’s growth translates into actual demand for components and company earnings is therefore expected to be key to the stock’s recovery.

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