Samsung Electro-Mechanics Achieves Record Q2 Sales Since Inception... Operating Profit Up 230% YoY (Update)

A worker is working in the cleanroom of Samsung Electro-Mechanics.

[Asia Economy Reporter Jeong Hyunjin] Samsung Electro-Mechanics recorded its highest quarterly sales since its founding in the second quarter of this year. Sales of high value-added products such as multilayer ceramic capacitors (MLCC) and high-spec semiconductor package substrates, its main products, increased significantly, leading to the highest operating profit on a quarterly basis.

On the 28th, Samsung Electro-Mechanics announced that its consolidated sales for the second quarter of this year reached 2.4755 trillion KRW, and operating profit was 339.3 billion KRW, up 41% and 230% respectively compared to the same period last year. The sales figure is the largest quarterly amount since Samsung Electro-Mechanics was founded in 1973, and the operating profit is the highest for a second quarter ever. It is the second highest overall quarterly operating profit following the third quarter of 2018 (404.9 billion KRW).

Samsung Electro-Mechanics explained that the performance improved significantly compared to the same period last year due to increased sales of high value-added products such as small and high-capacity MLCCs for IT, industrial and automotive MLCCs, and high-spec semiconductor package substrates.

By division, the components division recorded 1.1952 trillion KRW, up 42% year-on-year and 10% quarter-on-quarter. The module division's second-quarter sales increased 47% year-on-year but decreased 3% quarter-on-quarter to 813.7 billion KRW. The substrate division recorded sales of 466.6 billion KRW, up 27% year-on-year and 6% quarter-on-quarter.

In the module division, sales decreased quarter-on-quarter due to a seasonal off-season for strategic customers leading to reduced camera module supply, but sales increased year-on-year due to expanded supply of multi-camera, folded zoom, and high-resolution optical image stabilization (OIS) camera modules to Chinese customers. In the substrate division, semiconductor package substrates maintained full operation with continued expansion of supply for high-spec APs, high value-added solid-state drive (SSD) memory BGA, and PC CPU FCBGA, and performance improved due to an increased proportion of high value-added products.

Samsung Electro-Mechanics Q2 Earnings Report

Samsung Electro-Mechanics expects that despite increased market volatility due to the prolonged COVID-19 situation and some uncertainties related to set market conditions in the second half of the year, demand for related components will continue to grow with flagship model launches by major smartphone manufacturers and recovery in automotive demand.

The components division plans to expand supply of high value-added products such as small and ultra-high capacity MLCCs as IT-related demand for mobile, PC, TV, and gaming devices is expected to continue in the second half. It also anticipates increased demand for automotive MLCCs due to recovery in automotive demand and continued automotive electrification, and plans to respond promptly to market demand by expanding the automotive product lineup and improving production capacity, Samsung Electro-Mechanics said.

The module division expects recovery in camera module demand with new flagship smartphone launches by major domestic and overseas customers in the second half, but demand uncertainty in the Chinese market remains due to semiconductor supply issues and adjustments in set production plans. Samsung Electro-Mechanics added that it plans to secure a leading position in the flagship market with high-performance camera modules for new smartphones and continue to expand supply of camera module products for mid- to high-spec budget smartphones.

The substrate division also expects continued demand for high-spec package substrates such as AP, 5G antennas, and thin CPU substrates in the second half.

A Samsung Electro-Mechanics official said, "We plan to increase profitability by expanding the proportion of high value-added products and strengthen competitiveness with differentiated technologies such as embedded components and fine circuits."