Samsung Electro-Mechanics surges 756% in first half, outpacing Samsung Electronics and SK hynix

The top-performing stock in South Korea's equity market in the first half of this year was not semiconductor giants Samsung Electronics or SK hynix — it was Samsung Electro-Mechanics, the maker of multilayer ceramic capacitors (MLCC) used in AI servers. The company claimed the top spot on the Kospi by gain, signaling that the benefits of AI investment are spreading beyond memory chips to the broader components industry.

According to financial data provider Yonhap Infomax, Samsung Electro-Mechanics surged 756.47% from the start of the year through June 30, making it by far the Kospi's biggest gainer over that period. Its share price soared from around 270,000 won ($174) at the start of the year to 2.184 million won by June 30. Its preferred shares also jumped 585.34% over the same period. The figures are based on pure share price appreciation, excluding special factors such as share consolidations and capital reductions.

That performance far outpaced SK hynix, which rose 307.07% over the same period, as well as Samsung Electronics at 178.57% and Samsung Electronics Preferred at 137.67%. Even as the Kospi climbed from around the 4,000 level at the start of the year to the 9,000 level, Samsung Electro-Mechanics' advance was by far the most striking.

The company's market capitalization ranking also shot up sharply. Its market cap stood at 20.17 trillion won, ranking 33rd on the Kospi at the start of the year. By the end of last month it had swelled to 163.13 trillion won, vaulting the company into the top five.

Market analysts say the surge reflects a shift in the center of gravity of the global AI investment cycle — away from memory semiconductors and toward core server components.

AI-related gains had long been concentrated in SK hynix and Samsung Electronics, driven by demand for high bandwidth memory (HBM). But as big tech companies rapidly expanded their AI data centers, the importance of MLCC — which manage power delivery and signal stability in servers — grew sharply, and Samsung Electro-Mechanics, with its global competitiveness, emerged as the primary beneficiary.

Known as the "rice of the electronics industry," MLCC are high-value components that stabilize current flow and eliminate electrical noise. AI servers require far more high-performance MLCC than conventional servers, making the data center build-out trend a powerful earnings catalyst for the company.

A structural shift in Samsung Electro-Mechanics' business mix has also underpinned the share price rally. The company had historically relied heavily on mobile components such as those for smartphones, but sales of high-value MLCC for AI servers, industrial applications and automotive use have grown rapidly in recent years, lifting the overall quality of its earnings.

Brokerages have raised their targets in unison. Shinhan Securities, NH Investment Securities, KB Securities, Meritz Securities, Hana Securities and iM Securities have all recently set target prices for Samsung Electro-Mechanics at around 3 million won — implying roughly 50 percent additional upside from the closing price of 1.989 million won on Thursday.

"Samsung Electro-Mechanics has entered a phase of structural growth as a leading global electronic components maker," said Oh Kang-ho, an analyst at Shinhan Investment. "It remains our top pick as the most representative beneficiary of expanding high-value product sales in the AI era."

The strength in AI component stocks was not limited to Samsung Electro-Mechanics. Samwha Capacitor, another MLCC maker, rose 416.24% over the same period to rank second on the Kospi. "As leading players such as Samsung Electro-Mechanics and Japan's Murata move to raise prices, smaller rivals are also likely to see meaningful margin improvement," said Im Eun-young, an analyst at Samsung Securities.

Daewoo Engineering & Construction ranked third with a gain of 393.19%, buoyed by expectations surrounding a nuclear power plant contract in the Czech Republic, while SK Square rose 361.14% to take fourth place, riding the coattails of SK hynix's share price rally.

The Kosdaq also saw AI and semiconductor investment gains ripple through. Semiconductor equipment maker Jusung Engineering surged 625.63% to top the index, followed by GigaVis, which makes inspection equipment for semiconductor package substrates, with a gain of 510.16%. Taihan Fiberoptics rose 493.26%, lifted by expectations of investment in fiber-optic infrastructure needed to build out AI data centers.

Market participants broadly expect AI investment gains to continue spreading beyond memory semiconductors to electronic components, substrates, packaging and power semiconductors — encompassing the full AI infrastructure ecosystem. As global big tech companies keep expanding their AI data center spending, analysts expect a broader revaluation of the entire AI supply chain to continue.