Samsung Electro-Mechanics shares have surged over 5% as supply shortages of multilayer ceramic capacitors (MLCC) and FC-BGA components deepen, leading to improved investor sentiment amid expectations that the company's third-quarter performance will exceed market forecasts.
As of 10:35 a.m. on the Korea Exchange, Samsung Electro-Mechanics shares were trading at 1,508,000 won, up 5.53% or 79,000 won from the previous trading day.
iM Securities projects that Samsung Electro-Mechanics will report third-quarter sales of 3.9 trillion won, a 34% increase from the same period last year, and an operating profit of 650 billion won, a 150% rise. This operating profit is expected to exceed market consensus and previous estimates by 9%. Analysts attribute the faster-than-expected improvement in profitability for MLCCs and package substrates to these results.
The supply shortage of MLCCs is becoming increasingly severe. Last month, shortages primarily affected high-capacity MLCCs, but this month, the issue has spread to general-purpose products. Some items have seen distribution prices soar by 280% in just one month. The concentration of production capacity on server products is tightening the overall supply of MLCCs.
Supply constraints are also affecting FC-BGA components. According to market research firm TrendForce, the lead time for procuring ABF substrates has exceeded 48 to 56 weeks, four times the usual 12 weeks. This is due to bottlenecks in raw materials such as large-area substrates and T-glass. Major FC-BGA manufacturers, including Samsung Electro-Mechanics, are already discussing quantities with clients based on their chipset roadmaps extending into 2030. This supplier advantage has led to price increases of 10% to 20% each quarter.
Ko Ui-young, a researcher at iM Securities, stated, “Following strong third-quarter results, the anticipated price increases for MLCCs in direct supply transactions in the fourth quarter will serve as a catalyst for upward revisions in expectations. Given the current supply-demand environment and the rising prices of long-term supply contracts (LTA), there is a high likelihood that price adjustments will spread beyond automotive clients to other direct supply customers.” More than 80% of Samsung Electro-Mechanics' MLCC sales are from direct supply.
iM Securities has raised its operating profit forecasts for Samsung Electro-Mechanics for 2026, 2027, and 2028 by 3%, 4%, and 13%, respectively, and increased the target stock price from 2 million won to 2.1 million won.
* This article has been translated by AI.
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