Samsung Electro-Mechanics Reports 36% Drop in Operating Profit Last Year... Camera Module and MLCC Weakness (Comprehensive)

Q4 Sales Down 5% Year-on-Year, Operating Profit Down 55%

Samsung Electro-Mechanics Q4 Performance Results for Last Year

[Asia Economy Reporter Dongwoo Lee] Samsung Electro-Mechanics announced on the 29th that it recorded consolidated sales of 1.8456 trillion KRW and operating profit of 138.7 billion KRW in the fourth quarter.

Compared to the previous quarter, sales decreased by 17% to 370.3 billion KRW, and operating profit decreased by 27% to 50.5 billion KRW. Compared to the same period last year, sales decreased by 103.4 billion KRW (5%), and operating profit decreased by 171.1 billion KRW (55%).

Samsung Electro-Mechanics explained that sales of major products such as MLCC (Multilayer Ceramic Capacitors), camera modules, and RFPCB (Rigid-Flexible Printed Circuit Boards) declined compared to the previous quarter due to reduced set demand from key customers.

Meanwhile, on an annual basis last year, sales reached 8.0408 trillion KRW, and operating profit was 734 billion KRW. Sales increased by 0.5% compared to the previous year, but operating profit decreased by 36%.

By business segment, the Component Solutions division recorded sales of 775 billion KRW in the fourth quarter, down 5% from the previous quarter and 12% from the same period last year. Although supply of industrial and automotive MLCC increased, overall division sales decreased due to year-end inventory adjustments by strategic customers.

The company expects that with the expansion of the 5G smartphone market this year, supply of high value-added industrial products will increase. Additionally, as the automotive market is expected to continue growing, Samsung Electro-Mechanics plans to expand the supply capacity of automotive and industrial MLCCs to strengthen competitiveness.

The Module Solutions division recorded sales of 641.8 billion KRW in the fourth quarter, a 32% decrease from the previous quarter and a 9% decrease compared to the same period last year.

Sales to Chinese customers grew due to the expansion of high-spec camera modules such as 100-megapixel class and optical 5x zoom. However, sales decreased compared to the previous quarter due to reduced supply of camera and communication modules caused by year-end inventory adjustments.

Samsung Electro-Mechanics forecasts that the camera module market will expand adoption of multi-camera systems equipped with high-resolution sensors and optical zoom functions. Furthermore, with the introduction of 5G, demand for new materials and forms of dedicated antenna modules and WiFi is expected to increase.

The Substrate Solutions division recorded sales of 428.8 billion KRW in the fourth quarter, down 6% from the previous quarter but up approximately 18% compared to the same period last year. Supply of SiP substrates for 5G antennas and FCBGA for CPUs and GPUs increased, but sales of RFPCB for OLED decreased, resulting in a decline in sales compared to the previous quarter.

Samsung Electro-Mechanics plans to diversify customers for RFPCB as OLED display adoption expands, and improve profitability by increasing the proportion of high value-added products such as package substrates for 5G and networks.