Samsung Electro-Mechanics posts record third-quarter results on AI demand; outlook bright for next year

[Financial News] Samsung Electro-Mechanics posted record quarterly results, driven by expanded demand for components for AI servers. With stable demand secured through long-term supply contracts and capacity expansion also underway, the company is expected to continue growing next year. On the 28th, Samsung Electro-Mechanics said it recorded revenue of 3.7633 trillion won and operating profit of 691 billion won on a consolidated basis in the third quarter of this year. The figures were up 30% and 165%, respectively, from the same period last year. Both revenue and operating profit were the highest ever for a quarter.
Rising demand for high-value-added products, particularly for AI data centers, translated into strong results.
The Components Business Division, which handles multilayer ceramic capacitors (MLCCs), stood out for its earnings growth. Revenue in the third quarter of this year rose 36% year over year to 1.883 trillion won. Revenue increased across all applications, led by products for AI data centers, including servers, networking and power. 
Samsung Electro-Mechanics said demand was growing for higher-capacitance, smaller MLCCs as graphics processing units (GPUs) for AI servers become more powerful. During its earnings conference call that day, Samsung Electro-Mechanics said, "So far, we have signed or are in the process of signing long-term supply agreements with around 50 customers, focusing on high-value-added products such as high-capacitance, high-voltage products and leading-edge products for which supply is far short of market demand," adding, "Related sales are expected to account for more than half of next year's MLCC revenue."
MLCC demand is expected to remain firm in the fourth quarter as well. Samsung Electro-Mechanics said, "This year, demand for automotive MLCCs has been showing steady growth, while demand for leading-edge models for AI servers continues to grow strongly," and forecast, "We expect to post significant revenue growth, driven by an improved product mix centered on high-value-added products and rising average selling prices (ASP)."
The Package Solutions Business Division posted the biggest increase in revenue. Third-quarter revenue rose 58% year over year to 939 billion won. Growth was driven by increased shipments of high-value-added products for server central processing units (CPUs), AI accelerators and networking, as well as high-performance substrates for advanced driver-assistance systems (ADAS) and autonomous driving.
Regarding its recent investment to expand flip-chip ball grid array (FC-BGA) capacity, Samsung Electro-Mechanics added, "We plan to begin mass production in phases starting in 2027, with the investment set to contribute meaningfully to revenue from 2028," and, "Even with this major capacity expansion, it will be difficult to meet all customer demand, and requests for additional volumes continue to come in."
Third-quarter revenue at the Optical Solutions Business Division was 941.3 billion won, up 3% year over year. Results improved from last year, helped by the start of mass production of new 200-megapixel folded-zoom cameras, increased supplies for foldable phones, and expanded shipments of camera modules for the next-generation platforms of global electric vehicle (EV) customers. In the fourth quarter, the division plans to begin mass production of high-resolution, slim cameras for next-generation flagship models for strategic customers.
Samsung Electro-Mechanics expects strong AI demand to continue not only in the fourth quarter of this year but also next year. The company said, "Tight supply-demand conditions for MLCCs and package substrates are expected to intensify further next year as well," adding, "Demand will rise sharply for high-value-added products such as high-capacitance, high-voltage MLCCs and large-area, high-layer-count FC-BGAs, sustaining the upward trend in average selling prices for a considerable period."
It added, "We will also proceed without disruption with additional capacity expansion for mid- to long-term growth," and, "We expect to achieve record-high results in 2027 through strong earnings growth every quarter, starting in the first quarter."
[email protected] Park Ji-yeon Reporter