[Click e-Stock] Samsung Electro-Mechanics Shows Portfolio Improvement Effects

Rising AI Demand from China Adds to U.S. Growth

Samsung Electro-Mechanics is shifting its multilayer ceramic capacitor (MLCC) supply portfolio from the stagnant smartphone and PC sectors to products targeting high-growth, high-value-added industries such as artificial intelligence (AI) and electric vehicles. Analysts suggest that this could support continued improvement in the company's performance.

On June 5, KB Securities maintained its target price for Samsung Electro-Mechanics at 200,000 won and its "Buy" investment rating, citing these factors. The previous day's closing price was 121,700 won.

The company’s second-quarter results for this year are estimated to be 2.74 trillion won in revenue and 223 billion won in operating profit. These figures represent increases of 6.2% and 6.9%, respectively, compared to the same period last year. The sustained strong demand for high-value-added MLCC and packaging substrates for AI servers has contributed to this growth. In particular, for packaging substrates, supply of FC-BGA for AI accelerators to overseas customers is set to begin in the second quarter.

Sales of automotive MLCCs are also increasing due to the growth of the electric vehicle market and the expansion of advanced driver-assistance systems (ADAS). The surge in demand from China is especially notable. Samsung Electro-Mechanics is supplying MLCCs to major Chinese electric vehicle manufacturers, including BYD. As deliveries of new Tesla models ramp up, automotive camera sales are also expected to reach a record high for the quarter.

Lee Changmin, a research analyst at KB Securities, stated, "The increase in AI-related investment is leading to higher sales of high-value-added components for servers and networks. While AI-related demand was previously centered on U.S. customers, recently demand from China has also been growing rapidly, so the improvement in performance is expected to continue."