Samsung Electro-Mechanics is accelerating its production capacity for multilayer ceramic capacitors (MLCC) in response to increased investment in artificial intelligence (AI) infrastructure. The company is aggressively expanding its capital expenditure (CAPEX) due to a surge in demand for high-value MLCCs used in AI servers and data centers.
According to Samsung Electro-Mechanics' financial performance report released on August 5, the company's capital investment for the second quarter reached 606.6 billion won, a 122.2% increase from 273.0 billion won during the same period last year. This figure also more than doubled compared to the first quarter's 263.3 billion won, marking the largest quarterly investment to date.
This investment expansion is seen as a proactive measure to meet the rapidly growing demand for MLCCs, particularly for AI servers and data centers. MLCCs are essential passive components that stabilize current supply and eliminate unnecessary electrical signals (noise) in nearly all electronic devices, from smartphones to automobiles and servers. AI servers, in particular, require a significantly higher number of high-capacity and high-voltage MLCCs, making them a key beneficiary of the expanding AI infrastructure.
The company is also broadening its revenue base by securing multiple long-term supply agreements (LTA). It has signed long-term contracts with over 10 clients, including global hyperscalers, and is in discussions for additional agreements. These long-term contracts often involve advance payments or guaranteed volumes, providing a foundation for proactive expansion of production facilities.
Based on this, Samsung Electro-Mechanics is accelerating the expansion of its domestic and international production bases. Investments are underway to increase production capacity at key locations, including its Sejong facility, as well as in Vietnam and the Philippines. Recently, the company has expedited the operational timeline for its new MLCC factory in the Philippines to prepare for the supply of ultra-high-capacity MLCCs for AI accelerators.
The company is also increasing its investment in package substrates. In line with the growing supply of flip-chip ball grid array (FC-BGA) for AI accelerators, it is enhancing production capacity both domestically and internationally while simultaneously developing next-generation packaging and high-spec substrate technologies. Previously, the company announced an 8 trillion won investment to establish a new semiconductor package substrate production line for AI servers at its Sejong facility.
With recent price increases contributing to growth, the company anticipates a strong performance in the second half of the year. As the supply shortage of high-value MLCCs for AI infrastructure intensifies, it has raised prices for some MLCC products by up to 30% starting this month. The simultaneous increase in the proportion of AI server products and average selling prices (ASP) is expected to enhance profitability. The company has indicated that it expects to achieve record performance in the third quarter due to the anticipated worsening supply shortages of MLCCs and FC-BGAs.
* This article has been translated by AI.
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