Samsung Electro-Mechanics shares rose by over 10% in early trading following news of a supply contract for silicon capacitors worth 1.557 trillion won ($1.5 billion) with a major U.S. tech company.
As of 9:46 a.m. on May 21, the company’s stock was trading at 1,169,000 won, up 108,000 won (10.18%) from the previous day. During the session, the stock peaked at 1,219,000 won, setting a new all-time high.
The surge in share price appears to be driven by investor optimism following the company’s first large-scale supply achievement in its silicon capacitor business, which it has been cultivating as a new growth engine.
Samsung Electro-Mechanics announced the contract in a regulatory filing the previous day, stating that the deal is valued at 1.557 trillion won, equivalent to 13.8% of its recent revenue. The contract period runs from January 1, 2027, to December 31, 2028. The company did not disclose the name of the client or key contract terms due to business confidentiality.
Silicon capacitors are miniature electronic components essential for high-performance semiconductor package substrates. They allow for thinner package designs and can be positioned closer to high-performance system semiconductors, facilitating stable transmission of high-speed data.
Analysts are raising their price targets for Samsung Electro-Mechanics based on this contract. KB Securities and DB Securities have increased their target prices to 1,600,000 won, while Daol Investment and iM Securities have set their targets at 1,500,000 won and 1,400,000 won, respectively.
DB Securities analyst Cho Hyun-ji stated, "The silicon capacitor business is expected to contribute significantly to earnings after 2027. While this year's revenue is projected to be around 30 billion won, it is expected to grow to approximately 550 billion won in 2027 and reach 1 trillion won by 2028."
He added, "The average selling price (ASP) is estimated to be more than ten times that of general MLCCs, and profitability is expected to improve rapidly with enhancements in mass production. By 2028, the operating profit margin could exceed 30%."
* This article has been translated by AI.
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