Company Reports

Samsung Electro-Mechanics, or Semco, reported 24.2% year-on-year revenue growth for the June quarter, driven by robust sales of multilayer ceramic capacitors and flip chip-ball grid array, or FC-BGA, packages. Operating margin improved to 12.7% from 7.6% a year ago.

Samsung Electro-Mechanics is the global second-largest supplier of multilayer ceramic capacitors, which account for about 45% of Semco’s revenue and 70% of operating income. MLCCs are necessary to stabilize and control electric flow, and thus are necessary for all electronic circuits. We believe the robust demand for MLCCs, mainly from smartphone and automotive manufacturers, will be the driver of Semco’s growth in the midterm.

After follow-up meetings held after the March-quarter results, we revisited our view on artificial intelligence data center demand and updated our earnings forecasts and fair value estimates for Murata Manufacturing, Samsung Electro-Mechanics, Yageo, Taiyo Yuden, and TDK.

Samsung Electro-Mechanics is the global second-largest supplier of multilayer ceramic capacitors, which account for about 45% of Semco’s revenue and 70% of operating income. MLCCs are necessary to stabilize and control electric flow, and thus are necessary for all electronic circuits. We believe the robust demand for MLCCs, mainly from smartphone and automotive manufacturers, will be the driver of Semco’s growth in the midterm.

Following meetings with companies regarding December-quarter results, we revised our earnings forecasts and fair value estimates for passive component suppliers Murata Manufacturing, Samsung Electro-Mechanics, or Semco, TDK, and Taiyo Yuden.

Samsung Electro-Mechanics is the global second supplier of multilayer ceramic capacitors, which account for about 45% of Semco’s revenue and 70% of operating income. MLCCs are necessary to stabilize and control electric flow, and thus necessary for all electronic circuits. We believe the robust demand for MLCCs, mainly from smartphone and automotive manufacturers, will be the driver of Semco’s growth in the midterm.

Samsung Electro-Mechanics, or Semco, reported solid December-quarter numbers, with sales up 16.4% and operating margin improving year on year to 8.3% from 4.6%, driven by strong demand for artificial intelligence and automotive applications. The company expects this trend to persist into 2026.

Samsung Electro-Mechanics is the global second supplier of multilayer ceramic capacitors, which account for about 45% of Semco’s revenue and 70% of operating income. MLCCs are necessary to stabilize and control electric flow, and thus necessary for all electronic circuits. We believe the robust demand for MLCCs, mainly from smartphone and automotive manufacturers, will be the driver of Semco’s growth in the midterm.

Major passive component suppliers—Murata Manufacturing, Samsung Electro-Mechanics, Yageo, TDK, and Kyocera—all reported solid revenue growth in the September quarter, driven by computing demand. All of the Japanese suppliers raised their full-year guidance for fiscal 2025 (ending March 2026).

Samsung Electro-Mechanics is the global second supplier of multilayer ceramic capacitors, which account for about 45% of Semco’s revenue and 70% of operating income. MLCCs are necessary to stabilize and control electric flow, and thus necessary for all electronic circuits. We believe the robust demand for MLCCs, mainly from smartphone and automotive manufacturers, will be the driver of Semco’s growth in the midterm.

Revenue for Samsung Electro-Mechanics, or Semco, in the June quarter was up 7.9% from the previous year, driven by higher sales of multilayer ceramic capacitors, or MLCCs, and flip-chip ball grid arrays, or FC-BGAs. The operating margin of 7.6% was slightly below the 8.1% margin from a year ago.

Samsung Electro-Mechanics reported its March-quarter results with sales up 10% sequentially. While sales from the package solution division were down 9%, the other two divisions more than offset the shortfall. Operating margin improved to 7.3% from 4.6% due to better utilization.

Samsung Electro-Mechanics is the global second supplier of multilayer ceramic capacitors, which account for about 40% of Semco’s revenue and 70% of operating income. MLCCs are necessary to stabilize and control electric flow, and thus necessary for all electronic circuits. We believe the robust demand for MLCCs, mainly from smartphone and automotive manufacturers, will be the driver of Semco’s growth in the midterm.

Samsung Electro-Mechanics, or Semco, reported December-quarter earnings results, with revenue up 8.1% year on year, while the operating margin of 4.6% was lower than the 4.8% in the year-ago quarter.

Samsung Electro-Mechanics is the global second supplier of multilayer ceramic capacitors, which account for about 40% of Semco’s revenue and 70% of operating income. MLCCs are necessary to stabilize and control electric flow, and thus necessary for all electronic circuits. We believe the robust demand for MLCCs, mainly from smartphone and automotive manufacturers, will be the driver of Semco’s growth in the midterm.

South Korean President Yoon Suk Yeol declared martial law following parliamentary disputes. The declaration was voted down by parliament.

Samsung Electro-Mechanics is the global second supplier of multilayer ceramic capacitors, which account for about 40% of Semco’s revenue and 70% of operating income. MLCCs are necessary to stabilize and control electric flow, and thus necessary for all electronic circuits. We believe the robust demand for MLCCs, mainly from smartphone and automotive manufacturers, will be the driver of Semco’s growth in the midterm.

Samsung Electro-mechanics reported somewhat disappointing results for the September quarter. While revenue of KRW 2.62 trillion aligned with our expectations, operating income of KRW 225 billion was below our expectation of KRW 255 billion due to a worse-than-expected product mix.

Over the past two days, four passive component suppliers reported their June quarter results. Compared with our expectations, Murata Manufacturing’s numbers were slightly lower, Samsung Electro-Mechanics’ were mainly in line, and TDK’s and Yageo’s were higher. Such divergence in earnings performance is mainly due to differences in product portfolios, but demand by end-product generally showed a similar trend. While industrial products remained sluggish and automobiles and smartphones are stagnating, demand for applications related to high-performance computing, such as servers and PCs, seem to be improving. While we maintain our earnings forecasts and fair value estimate of JPY 4,000 for Murata Manufacturing, we plan to review our earnings forecasts for Semco, TDK, and Yageo after meeting with each company in early August. Overall, we expect that margin expansion for passive component suppliers will continue to improve in the coming quarters, driven by the better capacity utilization and an improved product mix. However, the strengthening of the Japanese yen could be a risk factor for Japanese suppliers.

Samsung Electro-Mechanics posted an operating income of KRW 180 billion for the March quarter, up 29% year on year and above our forecast of KRW 155 billion, driven by better-than-expected sales of multilayer ceramic capacitors and camera modules. While sales of the components division (mainly MLCC) were only 3% above our forecast, we estimate that the profitability was much better than we expected due to an improved product mix from solid sales to the industrial and automotive sectors. The optics & communication solutions division sales were up 47% year on year and 20% higher than our forecast due to better average selling prices and better shipments of Samsung’s flagship Galaxy S24.