Samsung Electro-Mechanics' Q1 earnings brisk on MLCC expansion

Samsung Electro-Mechanics' multi-layer ceramic capacitors / Courtesy of Samsung Electro-Mechanics

Samsung Electro-Mechanics posted solid numbers in the first quarter of this year, driven by brisk sales in its flagship multi-layer ceramic capacitor (MLCC) business.

The component company announced Tuesday that it posted 2.74 trillion won ($1.91 billion) in sales in the first quarter of the year, up 4.8 percent from a year earlier. Operating profits stood at 200.6 billion won, up 9.2 percent during the same period.

Its component division, which includes MLCC, showed a 19 percent year-on-year growth in sales to reach 1.22 trillion won in the first quarter. The company said this was driven by the launch of the flagship smartphones, Samsung Electronics' Galaxy series, and the increased supply of high-value-added MLCCs for industrial and automotive applications, including artificial intelligence (AI) servers.

The package division posted sales of 499.4 billion won, up 17 percent from a year earlier, buoyed by an increase in the supply of ball grid arrays (BGAs) for mobile application processors and memory. BGA is a semiconductor package substrate, and Samsung Electro-Mechanics manufactures an advanced flip chip BGA, which offers enhanced electrical performance and heat dissipation.

During an earnings call, the company projected that demand for MLCC will stay robust in the second quarter.

"MLCC demand is expected to continue growing for the time being, driven by the expanding adoption of advanced driver-assistance systems among Chinese electric vehicle (EV) makers," the company said. "The expansion of the EV market requires higher computing speeds and greater power consumption in vehicles, which in turn will drive an increase in MLCC use."

The company also forecast a growth trajectory in its chip substrate business based on strong demand for AI accelerators.

"Global cloud service providers are increasingly adopting in-house AI accelerators to cope with expansion in generative AI services," the company said.

"We have been preparing for mass production of substrates for AI accelerators, with meaningful revenue anticipated starting in the second quarter. By stabilizing mass production at our new Vietnam site, we aim to achieve a double-digit growth in flip-chip BGA sales this year."