KOSPIElectronic Components009150

Samsung Electro-mechanics

₩1,579,000▲ 1.15%2026-10-02 close

Market Cap

₩118.1T

Turnover

₩769.7B

Volume

490,000 shares

Shares out.

74.7M

PER

105.1×

PBR

10.3×

EPS

₩13,335

Dividend Yield

0.17%

PER, EPS, PBR and BPS are calculated in-house from the last 4 quarters (2025Q3–2026Q2) · Dividend yield is based on ₩2,350 per share · Prices as of the 2026-10-02 close

Report overview

MLCC Price Hikes Meet Record-High Earnings Multiples

A shortage of MLCCs and high-end semiconductor substrates for AI data centers has rapidly lifted quarterly profits, while the earnings multiple embedded in the share price sits far outside the company's historical trading range.

1
Second-quarter 2026 revenue reached KRW 3.457tn with operating profit of KRW 440.4bn, pushing the quarterly operating margin above 12%, a marked expansion versus the 8.1% full-year margin of 2025.
2
On its second-quarter call the company guided to a record third quarter and a strengthening trend into 2027, and said it had signed long-term MLCC supply agreements with about ten hyperscalers and chip firms.
3
MLCC price increases are broadening from distribution channels to OEM/ODM customers, with the participation of major Japanese suppliers cited as the swing factor for how far the increases spread.
4
The company disclosed a long-term investment plan totalling KRW 23tn through 2040, including KRW 8tn in Sejong and KRW 15tn in Busan, while the earnings contribution from new capacity is projected well into the future.
5
Earnings and book-value multiples implied by the share price sit well above the historical trading band, raising the burden of proof on the pace and durability of the profit improvement.

Business structure

Samsung Electro-Mechanics is a diversified electronic components maker organised into three divisions: Components (multilayer ceramic capacitors, or MLCC), Package Solutions (semiconductor package substrates such as FC-BGA) and Optics Solutions (camera modules).

Second-quarter 2026 divisional revenue was disclosed as KRW 1,649.4bn for Components, KRW 771.6bn for Package Solutions and KRW 1,036.2bn for Optics Solutions.

MLCC is therefore the largest revenue pillar, with camera modules second, but the centre of gravity for profit contribution has recently shifted toward Components and substrates. Media reports list Nvidia, AMD, Amazon and Marvell among its major customers.

Management attributed the second-quarter improvement to expanded MLCC sales for AI servers, networking and automotive applications, high-value substrate supply to global big-tech customers, and rising shipments of ADAS and autonomous-driving components.

Optics Solutions remains dependent on domestic and overseas smartphone customers; the company said it plans to expand high-performance camera modules for a strategic customer's new foldable phone in the third quarter while also broadening into next-generation electric-vehicle platforms and humanoid robot cameras.

In MLCC the competitive order runs Murata first, Samsung Electro-Mechanics second and Taiyo Yuden third; TrendForce data put June 2026 monthly shipments at roughly 140bn units for Murata, about 98bn for Samsung Electro-Mechanics and 40bn for Taiyo Yuden.

In substrates it competes with Japan's Ibiden and Shinko and Taiwan's Unimicron, while in next-generation glass substrates rivals include SKC's Absolics, Ibiden, DNP and Unimicron. Samsung Electronics is the largest shareholder, linking the company closely to the group's semiconductor and set businesses.

Earnings trend

Quarterly revenue · Operating profit

₩2.8T₩213B25Q2₩2.9T₩260.3B25Q3₩2.9T₩239.5B25Q4₩3.2T₩280.6B26Q1₩3.5T₩440.4B26Q2

RevenueOperating profit

Annual revenue · Operating profit

₩9.4T₩1.2T2022₩8.9T₩639.4B2023₩10.3T₩735B2024₩11.3T₩913.3B2025

RevenueOperating profit

Quarterly results · Last 5 quarters
Quarter	Revenue	Operating profit	Op. margin
2025Q2	₩2.8T	₩213B	7.6%
2025Q3	₩2.9T	₩260.3B	9.0%
2025Q4	₩2.9T	₩239.5B	8.3%
2026Q1	₩3.2T	₩280.6B	8.7%
2026Q2	₩3.5T	₩440.4B	12.7%

Annual results
Year	Revenue	Operating profit	Net income (parent)	Op. margin	ROE	Debt-to-equity
2022	₩9.4T	₩1.2T	₩993.5B	12.6%	13.2%	42.9%
2023	₩8.9T	₩639.4B	₩423B	7.2%	5.4%	45.2%
2024	₩10.3T	₩735B	₩679.1B	7.1%	7.7%	41.9%
2025	₩11.3T	₩913.3B	₩706.1B	8.1%	7.4%	49.0%

Consolidated basis (financial statements including subsidiaries) · Final figures from DART filings · Net income attributable to owners of the parent · Data as of 2026-09-04

Earnings analysis

On confirmed figures, 2025 full-year revenue was KRW 11,314.5bn with operating profit of KRW 913.3bn and net profit attributable to owners of KRW 706.1bn, for an operating margin of 8.1%.

That compares with 2024 (revenue KRW 10,294.1bn, operating profit KRW 735.0bn, 7.1% margin) and 2023 (revenue KRW 8,909.4bn, operating profit KRW 639.4bn, 7.2% margin), showing simultaneous growth in sales and margin.

Against 2022 (revenue KRW 9,424.6bn, operating profit KRW 1,182.8bn, 12.6% margin), however, 2025 profit remains lower, so the path is best read as a recovery from the 2023 trough.

The quarterly trend is sharper: from KRW 2,784.6bn revenue and KRW 213.0bn operating profit in the second quarter of 2025 (about a 7.7% margin), through KRW 2,889.0bn/KRW 260.3bn in the third quarter and KRW 2,902.1bn/KRW 239.5bn in the fourth, revenue crossed KRW 3tn in the first quarter of 2026 at KRW 3,209.1bn with KRW 280.6bn operating profit.

In the second quarter of 2026 revenue reached KRW 3,457.2bn, operating profit KRW 440.4bn and net profit attributable to owners KRW 315.7bn, lifting the operating margin above 12%, the highest of the past five quarters.

Management attributed the improvement to expanded data-centre and automotive MLCC sales and higher shipments of high-value substrates to big-tech customers.

On earnings quality, operating cash flow rose to KRW 1,490.1bn in 2025 from KRW 1,429.8bn in 2024 and KRW 1,180.4bn in 2023, while the debt-to-equity ratio rose to 49.0% at end-2025 from 41.9% a year earlier.

Net profit attributable to owners over the most recent four quarters (third quarter 2025 through second quarter 2026) totalled roughly KRW 1tn, above the 2025 full-year figure, indicating that the profit recovery is running ahead of the latest annual accounts.

Industry analysis

MLCC and high-end semiconductor substrates have entered a tight phase of the cycle on the back of AI server proliferation.

As of end-June 2026 Samsung Electro-Mechanics' book-to-bill ratio stood at 1.31, its highest since the pandemic, with Murata at 1.30 and Taiyo Yuden at 1.25, while MLCC inventories are understood to have fallen below 30 days.

TrendForce said pre-emptive stockpiling by distributors and agents lifted average selling prices by 20-25%, with some spot prices two to three times prior levels. Price increases are widening in scope.

Citing TrendForce, Money Today reported that the company raised distributor prices by 30% from August and is expected to extend increases to OEM and ODM customers in the fourth quarter, with commodity X5R parts up 25-30% and high-specification X6S parts for AI servers up 10-20%.

That said, Murata, Taiyo Yuden and Kyocera were reported to be holding prices while watching the market, and Japanese participation could signal a broader industry-wide move. Substrates face structural supply constraints as well.

Analysts note that rising AI accelerator and server CPU demand combined with larger, higher-layer-count substrates is amplifying effective capacity loss, implying maximum utilisation from the second half of 2026, with new capacity expected to contribute meaningfully only after 2028.

On end demand, estimates have been published projecting that 2026 capital expenditure by Google, Amazon, Microsoft and Meta will rise 82.5% year on year with a further 35.3% increase in 2027.

The competitive position rests on technical barriers: Meritz Securities said only Samsung Electro-Mechanics and Murata apply the relevant process to MLCC manufacturing and that entry by later followers should be limited given the technical difficulty.

Outlook

The company's own guidance is explicit.

On its second-quarter 2026 conference call, Samsung Electro-Mechanics guided to record third-quarter results driven by intensifying tightness in high-value products such as MLCC and FC-BGA, expanding long-term supply agreements and continued average price increases, and said the trend should strengthen further in the fourth quarter and in 2027.

In Components it has secured volumes through long-term MLCC supply agreements with about ten global customers including major hyperscalers. Individual contracts reported include a KRW 454bn AI-server MLCC supply agreement with a US big-tech firm in June 2026 and a KRW 1,557bn silicon capacitor supply agreement in May.

Capacity additions are proceeding at home and abroad. The company disclosed a KRW 23tn investment plan through 2040, comprising KRW 8tn in Sejong and KRW 15tn in Busan, alongside KRW 1.8tn for FC-BGA capacity in Vietnam and KRW 75bn injected into Philippine MLCC operations in the fourth quarter of 2025.

Given that capital spending over the past decade totalled about KRW 10,294.8bn, the planned intensity is more than double the historical run rate.

In new businesses, it is preparing glass substrate commercialisation in stages and signed a definitive agreement in early July 2026 with Dongwoo Fine-Chem, a Sumitomo Chemical subsidiary, to form a joint venture producing glass core material.

Meanwhile the Components division ran at 95% utilisation in the first quarter and mass production from the Philippine expansion is expected only after 2027, so near-term volume growth depends more on pricing and mix.

Among brokerage estimates, Daishin Securities in early September 2026 estimated third-quarter operating profit at KRW 636.3bn, above both its prior forecast and the market consensus.

Valuation

PER

105.1×

PBR

10.3×

ROE

10.6%

EPS

₩13,335

BPS

₩135,401

Dividend per share

₩2,350

The earnings multiple implied by the current share price sits well above the range in which this company has historically traded and above typical levels for Korean electronic component makers.

The premium to book value is also unusually wide, suggesting that much of the assumption of continued gains in pricing, utilisation and mix is already embedded rather than resting on confirmed results.

The dividend payout is modest relative to earnings and the dividend yield runs below the KOSPI average, so the earnings growth path rather than income is central to the equity story.

For reference, Asia Economy Daily reported that DB Securities raised its target price to KRW 2,000,000 from KRW 1,500,000 in a report dated 2 September 2026. Money Today also reported that KB Securities maintained a target price of KRW 3,000,000 in a report dated 31 July 2026.

These targets are the views of those brokerages, and it is worth noting that when multiples sit outside historical bands, small changes in earnings estimates translate into large swings in valuation interpretation.

PER, EPS, PBR and BPS are all calculated in-house (the same method as Naver and Toss) · Dividend yield = cash dividend per share from DART filings (supplemented by KRX) ÷ current price · As of 2026-09-04

Bull factors

Pricing and mix are lifting margins simultaneously

The second-quarter 2026 operating margin exceeded 12%, well above the 8.1% recorded for full-year 2025 and roughly 7.7% in the second quarter of 2025.

After a 30% increase to distributors, reports indicate the scope of increases will widen in the fourth quarter to OEM and ODM customers and to high-specification AI server parts.

One brokerage analyst said that compared with the 2017-2018 price up-cycle, the company's MLCC profitability remains in the low-to-mid teens, placing it at the early stage of a pricing upturn. In a business with high fixed costs, price increases widen the room for margin improvement.

Long-term agreements improve volume visibility

The company said it has signed long-term MLCC supply agreements with around ten global customers including major hyperscalers. Purchasing practice is shifting from spot buying toward long-term agreements, and some analysts argue this implies a lengthened profit cycle rather than a one-off price increase.

Seoul Economic Daily reported that the company is using advance payments secured through such agreements as a funding source for capacity expansion. When volumes and funding are tied to contracts, the business risk attached to expansion is comparatively lower.

Revenue mix shifting from handsets to AI infrastructure and autos

Second-quarter 2026 Components revenue rose 29% year on year to KRW 1,649.4bn and Package Solutions rose 37% to KRW 771.6bn. Optics Solutions, by contrast, grew only 10% year on year, showing that the growth axis has moved to data-centre and automotive components.

DB Securities assessed that with the server-grade share of FC-BGA expected to approach 70% next year from 60% this year, the earnings contribution should steepen. This shift in mix reduces dependence on smartphone seasonality.

Bear factors

Much of the earnings expectation is already in the price

The earnings and book-value multiples implied by the share price stand well above both the company's historical trading band and sector averages. On confirmed numbers, the 2025 full-year operating margin was 8.1%, and a double-digit quarterly operating margin has been confirmed in only one quarter, the second of 2026.

If quarterly results fall short of company guidance or market estimates, the swing in valuation interpretation could therefore be large.

Indeed, KB Securities noted in a 31 July 2026 report that the share price had fallen 60% over the prior month even as fundamentals became firmer, illustrating how wide the gap between earnings and share price can become over short periods.

Durability of price hikes depends on rivals and customer resistance

Murata, Taiyo Yuden and Kyocera have held prices while observing the market, and Japanese participation is seen as decisive for whether increases spread across the industry.

One outlet summarised that expectations require shortages to translate into actual price rises, customers to lock in volumes via long-term agreements and share to be defended, whereas rapid strategy shifts by competitors or customer resistance to increases could change the earnings outlook.

The MLCC market has a strong tendency for the second and third players to follow the leader's pricing policy, meaning pricing power is not held by a single firm. Commodity-grade increases are especially exposed to pushback.

A time lag between heavy investment and profit contribution

The company disclosed a KRW 23tn investment plan through 2040, including KRW 8tn in Sejong and KRW 15tn in Busan. Analysts, however, expect meaningful earnings contribution from new capacity only after 2028, meaning spending comes first and returns later.

On confirmed financials, the debt-to-equity ratio rose to 49.0% at end-2025 from 41.9% a year earlier, so the effect of higher investment intensity on the balance sheet and cash flow warrants continued monitoring.

The company itself stated that the scale and timing of this long-term investment plan may change with market and business conditions.

Risk factors

End-demand cycle

The main earnings driver is hyperscaler investment in AI data centres. Projections have been published for an 82.5% year-on-year increase in 2026 capital spending by the four large North American technology firms, but these are estimates and execution pace can vary.

If AI investment slows, both pricing headroom and utilisation would come under pressure simultaneously. Optics Solutions carries a separate cycle risk tied to smartphone demand and new product launch schedules.

Raw materials and currency

Competitors' price increases have been linked to rising costs of key raw materials such as gold and silver, with analysts noting an environment in which cost burdens can be passed to customers.

Taiyo Yuden told customers that surging raw and auxiliary material prices had reached a level it could not absorb through internal cost reduction alone. If price increases lag while input costs rise, margins can compress. Given the high export share of the business, movements in the Korean won also affect quarterly results.

Customer concentration and new-business execution

With major customers reported to be a small group of large firms including Nvidia, AMD, Amazon and Marvell, changes in a single customer's volumes or platforms can flow directly into results. Glass substrates, the new business, remain an area with fluid commercialisation timelines.

Industry voices note that while glass substrates are clearly the right technical direction, mass production is still some way off and breakage risk and cost limit expansion into commodity markets.

The company has been reported to be producing prototypes on a pilot line at its Sejong site with full production centred on the joint venture targeted for after 2027, and schedule changes remain possible.

What to watch next

Late October 2026
Third-quarter results and the conference call. Since management guided to record third-quarter results, the checkpoints are the revenue and operating profit levels and whether divisional operating margins held or improved on the above-12% level of the second quarter.
Fourth quarter of 2026
Watch whether MLCC price increases are actually applied to OEM and ODM customers and whether the increases for commodity X5R and AI-server X6S parts land within the reported ranges. Whether Murata, Taiyo Yuden and Kyocera maintain their price freeze is a parallel indicator.
End of 2026
Completion of the glass substrate joint venture with Dongwoo Fine-Chem and the timeline for the glass core line, plus progress on the plan for initial production of humanoid camera modules, are gauges of new-business execution.
January 2027
Confirmed fourth-quarter and full-year 2026 results, the dividend decision and commentary on the direction for 2027. Since management said it expects the trend to strengthen further in 2027, this is the point to test whether that premise holds.
First half of 2027
Mass production from the Philippine MLCC expansion has been expected only after 2027, so actual start-up and the resulting capacity addition should be verified. Changes in the debt-to-equity ratio and operating cash flow arising from heavy investment execution are also worth tracking.

Overall view

Samsung Electro-Mechanics' confirmed results describe a profit recovery from the 2023 trough.

From 2025 revenue of KRW 11,314.5bn and operating profit of KRW 913.3bn (8.1% margin), revenue reached KRW 3,209.1bn in the first quarter of 2026 and KRW 3,457.2bn with KRW 440.4bn operating profit in the second, with the second-quarter operating margin above 12%.

The drivers are data-centre and automotive MLCC plus high-value semiconductor substrates for big-tech customers, and the company said it has signed long-term supply agreements with around ten customers including hyperscalers.

A book-to-bill ratio at its highest since the pandemic and a widening of price increases from distributors to finished-product customers support the bullish case, while the price freeze at major Japanese suppliers and the long lead time before new capacity contributes support the bearish case.

On valuation, earnings and book-value multiples sit well above the historical trading band and sector averages, so small changes in estimates translate into large shifts in interpretation.

The next items to verify are third-quarter results in late October, the actual application of fourth-quarter price increases, and the execution pace of the KRW 23tn investment plan together with the associated financial metrics. This report is for information purposes only and contains no buy or sell opinion and no target price.

Sources

Korea Exchange (KRX) — Prices · Market Cap · Volume
FSS electronic disclosure system (DART) — Financial statements · Dividend filings

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Report written 2026-09-05 · Data as of 2026-09-04

This content is AI analysis of market data and web search results, provided for information only. It is not a solicitation or recommendation to invest. Investment decisions and their consequences are the investor's own responsibility. Data may be delayed or contain errors.