Samsung Electro-Mechanics shares rose more than 5% during trading, buoyed by strong demand for multilayer ceramic capacitors (MLCC) and flip chip ball grid arrays (FCBGA) for AI servers, with analysts predicting record earnings for the third quarter.
As of 1:39 PM on September 18, the company’s stock was trading at 1,401,000 won, up 5.34% or 71,000 won from the previous trading day, according to the Korea Exchange.
KB Securities projected that Samsung Electro-Mechanics will report third-quarter sales of 3.83 trillion won, a 33% increase from the same period last year, and an operating profit of 660.1 billion won, up 154%. The operating profit margin is estimated at 17.2%, significantly exceeding market expectations and setting a new record.
The anticipated improvement in performance is attributed to strong sales of products for AI servers. Analysts noted that full utilization of MLCC and FCBGA production, along with price increases and improved product mix, are enhancing profitability. The operating profit margin for MLCC is expected to rise from 11.7% in the first quarter to 16.6% in the second quarter and 22.0% in the third quarter. Similarly, the operating profit margin for packaging substrates is projected to improve from 7.6% to 13.6% and then to 20.8% over the same period.
Lee Chang-min, a researcher at KB Securities, assessed that despite recent stock adjustments, Samsung Electro-Mechanics' fundamentals are strengthening. In the past three months, three long-term supply contracts for MLCC have been announced with major U.S. tech companies, and a supply shortage for packaging substrates is expected to persist.
Lee stated, "Core components for AI, such as MLCC and FCBGA, are experiencing unprecedented boom conditions, and further improvements in the market are anticipated." KB Securities maintained a 'Buy' rating on Samsung Electro-Mechanics with a target price of 3 million won.
* This article has been translated by AI.
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