Samsung Electro-Mechanics announced a robust first-quarter performance on Thursday, reporting an operating profit of 280.6 billion won ($189 million). This figure represents a significant 40 percent increase from the previous year and surpassed analyst expectations of 271.5 billion won, driven primarily by soaring demand for high-end semiconductor substrates crucial for AI accelerators.
The global components manufacturer also saw its revenue climb 17 percent to 3.21 trillion won, comfortably exceeding the consensus forecast of 3.09 trillion won for the quarter.
Remarkably, this impressive profit growth was achieved despite a one-off 71.4 billion won charge related to retirement expenses during the period. Excluding this charge, Samsung Electro-Mechanics’ underlying operating profit would have reached approximately 352 billion won, signaling even stronger inherent earnings momentum.
As a key Samsung group affiliate, supplying essential components to industry leaders like Nvidia, Apple, and major automakers, the company operates across three main business lines. The ‘Package Solutions’ division, responsible for producing advanced flip-chip ball grid array (FC-BGA) substrates, recorded the most substantial growth. Sales in this segment surged 45 percent year-on-year to 725 billion won.
FC-BGA boards are vital components that connect high-performance processor chips to the main circuit boards within servers and other complex electronic devices. Their production is highly specialized, with only a select few global manufacturers, including Japan’s Ibiden and Shinko Electric, Taiwan’s Unimicron, and Samsung Electro-Mechanics, capable of high-volume output.
The ‘Components’ division, which manufactures multilayer ceramic capacitors (MLCCs) essential for AI servers and advanced driver assistance systems (ADAS), also posted solid growth, rising 16 percent to 1.41 trillion won. Meanwhile, the ‘Optical Solutions’ segment, focused on camera modules for the smartphone market, increased 5 percent to 1.08 trillion won.
Samsung Electro-Mechanics highlighted that FC-BGA shipments saw expanded applications across “AI accelerators, server CPUs, and high-end network substrates for global big-tech customers.” The company further revealed plans to commence volume shipments of network-use substrates to a new hyperscaler client in the second quarter, without disclosing the customer’s identity.
Management remains optimistic for the April-June period, anticipating continued strength in industrial and automotive components. This outlook is supported by increasing data center power consumption and the wider adoption of ADAS technologies across the automotive industry.
The stellar financial results underscore a period of significant investor confidence, reflected in the company’s stock performance. Shares closed at 827,000 won on Wednesday, having more than doubled from 407,500 won at the end of March, and traded as high as 835,000 won during Thursday afternoon trading.
Park Kang-ho, an analyst at Daishin Securities, projects that Samsung Electro-Mechanics is on track to achieve record annual results for the second consecutive year. He also flagged a potential MLCC price increase in the second half of the year as a significant future catalyst for the company.
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