"AI and Electronic Components Growth"... Samsung Electro-Mechanics Q3 Operating Profit Up 20% YoY

Sales of 2.6153 Trillion KRW, Operating Profit of 224.9 Billion KRW

Samsung Electro-Mechanics announced on the 29th that it recorded consolidated sales of 2.6153 trillion KRW and an operating profit of 224.9 billion KRW for the third quarter of this year. This represents an increase of 11% and 20%, respectively, compared to the same period last year. Compared to the previous quarter, sales and operating profit increased by 2% and 6%, respectively.

Performance improved as the supply of high value-added products such as AI multilayer ceramic capacitors (MLCCs), automotive camera modules, and server semiconductor package substrates increased due to market growth in artificial intelligence (AI), automotive electronics, and servers.

Samsung Electro-Mechanics Suwon Plant view. [Photo by Samsung Electro-Mechanics]

By business division, the Components division recorded sales of 1.197 trillion KRW in the third quarter, up 9% from the same period last year and 3% from the previous quarter. This was thanks to increased MLCC supply centered on high value-added products such as industrial and automotive MLCCs for AI, servers, and networks.

The Optical Communication Solutions division posted sales of 860.1 billion KRW, a 5% increase from the same period last year. This was attributed to increased supply of new high-performance camera modules for strategic smartphone customers and automotive camera modules for global clients.

The Package Solutions division recorded sales of 558.2 billion KRW, up 27% year-on-year and 12% quarter-on-quarter, driven by increased demand for high value-added products. The expansion of ball grid array (BGA) supply for ARM central processing units (CPUs) and increased sales of large-area, high-layer AI, server, and automotive flip-chip ball grid array (FC-BGA) substrates contributed to the performance. In particular, AI and server FC-BGA sales, mainly for CPUs, are expected to grow about twice as much as last year.

A Samsung Electro-Mechanics official forecasted, "Although some product sales are expected to weaken in the fourth quarter due to reduced component demand from year-end seasonality, demand for high-performance products such as AI, automotive, and server components will continue to grow."

In the Components division, MLCC demand is expected to slow in the fourth quarter due to year-end component inventory adjustments. However, Samsung Electro-Mechanics plans to expand its lineup of automotive MLCCs that withstand high temperature and high pressure and strengthen sales focused on high value-added products such as small-sized, high-capacity IT MLCCs. Especially, Samsung Electro-Mechanics is maintaining a leading position in AI server MLCC sales and expects related sales this year to more than double compared to last year.

The Optical Communication Solutions division plans to respond promptly to mass production demands for high-performance camera modules such as high-resolution folded zoom and expand supply of all-weather automotive camera modules while diversifying its client base.

The Package Solutions division expects continued growth in demand for high value-added substrates for AI, servers, networks, and automotive applications in the fourth quarter. Accordingly, Samsung Electro-Mechanics plans to increase supply of server FC-BGA and expand the proportion of high value-added products such as FC-BGA for AI accelerators. Additionally, through stabilizing mass production at the new Vietnam plant, which began mass production in the second quarter, the company plans to sustain growth in its high-end package substrate business.