Samsung Electro-Mechanics posts record quarterly profit on AI data center demand

Samsung Electro-Mechanics said Wednesday it set all-time quarterly records for both sales and operating profit in the third quarter, driven by surging demand for multilayer ceramic capacitors (MLCCs) and high-value flip-chip ball grid array (FC-BGA) substrates from AI data centers. The strong performance is expected to continue for now.

The company reported consolidated sales of 3.76 trillion won ($2.84 billion) and operating profit of 691 billion won for the third quarter, up 30 percent and 166 percent, respectively, from the same period a year earlier.

Samsung Electro-Mechanics attributed the results to broad-based sales growth across all applications in its components division led by AI-focused products, rising FC-BGA sales for AI data centers and automotive use, and expanded supply of camera modules for next-generation platforms on global electric vehicles.

The package solutions division, which produces AI semiconductor substrates, posted the sharpest growth. Third-quarter sales reached 938 billion won, up 58 percent from 593.2 billion won in the same period last year.

The company said growth was driven by expanded supply of high-value products for data centers — including server CPUs, AI accelerators and networking applications — as well as increased shipments of high-performance substrates for advanced driver-assistance systems and autonomous driving.

Samsung Electro-Mechanics expects customers tied to AI data centers to keep pressing for expanded supply in the fourth quarter. The company plans to meet that demand by delivering new high-value FC-BGA products for server CPUs and AI accelerators on schedule and by scaling up production capacity at each of its facilities in a timely manner.

The company had already announced plans to build dedicated production lines for Nvidia AI semiconductor package substrates at its Sejong and Busan plants. The two companies announced a strategic business partnership Tuesday to expand next-generation AI infrastructure and disclosed a joint investment plan.

The components division, which accounts for the largest share of total sales, also turned in strong growth. Third-quarter sales reached 1.88 trillion won, up 36 percent year-on-year, with gains across all applications led by AI data center products including servers, networking and power components.

As AI server GPUs grow more powerful, demand for higher-capacity and ultra-compact MLCCs is intensifying. Samsung Electro-Mechanics holds more than a 40 percent share of the AI server MLCC market and is meeting demand from global customers. MLCC-related orders the company has disclosed so far this year total around 2.4 trillion won.

In the fourth quarter, the company plans to get ahead of the market by accelerating development of its most advanced products and expanding supply of compact, ultra-high-capacity MLCCs for AI applications, while continuing to fulfill long-term supply agreements with major big-tech customers.

The optical solutions division posted third-quarter sales of 941.3 billion won, up 3 percent year-on-year. Broadly sluggish smartphone demand, weighed down by semiconductor price increases, is seen as having dampened camera module performance.

The company said earnings improved from a year earlier on the back of new mass production of a 200-megapixel folded-zoom camera, expanded supply for foldable phones, and increased shipments of camera modules for next-generation global EV platforms. It said it expects demand to grow further as autonomous driving technology advances and humanoid robots move toward commercialization.

"We are continuing to fulfill long-term MLCC supply agreements centered on our major big-tech customers," the company said. "We plan to grow sales by responding promptly to requests from AI data center customers for expanded package substrate supply and by delivering next-generation platform camera modules to global EV customers."