Samsung Electro-Mechanics: MLCC and ABF shortages persist... “Growth unlikely to lose momentum through 2028”

[Financial News] Hyundai Motor Securities expects Samsung Electro-Mechanics to continue growing its earnings through 2028, buoyed by shortages of multilayer ceramic capacitors (MLCCs) and semiconductor package substrates (ABF). It maintained its “Buy” rating and target price of 2.3 million won.
Kim Jong-bae, a researcher at Hyundai Motor Securities, said on the 28th, “Samsung Electro-Mechanics recorded consolidated revenue of 3.763 trillion won and operating profit of 691 billion won in the third quarter of this year, up 30% and 165%, respectively, from a year earlier.” He added, “Thanks to increased revenue and improved profitability from MLCCs and ABF, results exceeded market expectations.”
In particular, the lead times for both MLCCs and ABF—the time from order to delivery—have lengthened to at least three to four times their levels under balanced conditions. Even amid recent AI-related external factors and deteriorating investor sentiment, the supply-demand imbalance is unlikely to be resolved, leaving the outlook for future earnings positive. Kim forecast fourth-quarter revenue and operating profit of 3.95 trillion won and 853 billion won, respectively, up 36% and 256% year over year.
The share of MLCC revenue from AI data centers is expected to rise from 28% in the third quarter to 34% in the fourth quarter. Volumes under long-term supply agreements (LTAs) are expected to ramp up in earnest starting next year, lifting the share of high-value-added products as well. ABF sales to the server market also account for around 60%, supporting expectations of higher profitability from price increases and an improved product mix.
Kim stressed, “Prices for MLCCs and ABF continue to rise not only because of an improved product mix but also due to selling-price increases,” adding, “The growth trajectory through 2028 is structurally unlikely to be derailed.”

[email protected] Im Sang-hyeok Reporter