[Edaily Reporter Park Sun-Yeop ] SamsungElectroMechanics(009150)and LG Innotek(011070) Although their stock prices have recently undergone a sharp correction, analysts say the growth trend in the components sector driven by expanding investment in artificial intelligence (AI) infrastructure remains unchanged. With supply shortages of multilayer ceramic capacitors (MLCCs) and packaging substrates intensifying, the boom in related industries is expected to continue until at least 2028.
Lee Chang-min, an analyst at KB Securities, stated in a report on the 23rd, “Over the past month, the stock prices of SamsungElectroMechanics and LG Innotek have plummeted by 40% and 57%, respectively, from their recent highs,” adding, “This is believed to be influenced by supply-and-demand factors, such as profit-taking following a short-term surge and concerns over a slowdown in AI infrastructure investment.”

However, he assessed that, contrary to the decline in stock prices, the fundamentals of the core businesses driving the two companies’ earnings remain solid. He explained that while demand for MLCCs and packaging substrates—particularly for AI data centers—is growing rapidly, it takes at least two years to expand production capacity, making it difficult for supply to keep pace with the rate of demand growth.
The analyst said, “The supply shortage of MLCCs and packaging substrates for AI servers is actually intensifying over time,” adding, “Strong demand is evident through rising product prices, contracts favorable to suppliers, and joint investments in new facilities with clients.”
The analyst also projected that SamsungElectroMechanics and LG Innotek’s second-quarter earnings this year would exceed market expectations. Consequently, earnings forecasts for the second half of this year and next year are likely to be further revised upward, and the analyst anticipates continued news of long-term supply contracts with big tech companies and large-scale order wins.
Analysts predict that as the supply shortage persists, the MLCC and packaging substrate markets will follow a trend similar to that of memory semiconductors—characterized by “sold-out inventory and rising prices.” They also cited the increasing proportion of long-term supply contracts and the growing number of cases involving large upfront payments as factors enhancing the visibility of future earnings.
The analyst identified SamsungElectroMechanics and LG Innotek as top picks in the electrical and electronics sector, stating, “Valuation pressures have eased due to the sharp drop in stock prices,” and adding, “It is highly likely that stock prices will bottom out starting in late July, when strong earnings are confirmed, and then show a gradual upward trend.” He further assessed that “the recent repeated sharp stock price corrections present buying opportunities from a medium- to long-term perspective.”