[Edaily Reporter Kim Kyung-eun ] On the 24th, iM Securities assessed that SamsungElectroMechanics(009150)is further strengthening its pricing power amid a supply shortage by signing additional long-term supply agreements (LTAs) for multilayer ceramic capacitors (MLCCs) used in artificial intelligence (AI) servers. Accordingly, the firm maintained its “Buy” investment rating and target price of 3 million won.

Park Jeong-ha, an analyst at iM Securities, stated in a report released that day, “This contract confirms that the long-term supply agreement signed at the end of June was not a one-off deal, while also demonstrating that the supplier’s bargaining power has further increased.”

SamsungElectroMechanics announced an MLCC supply contract worth 295.1 billion won on the 23rd. The contract period runs from January to December 2027. Including the 454 billion won contract announced last June, the total value of long-term supply contracts for 2027 has increased to 749.1 billion won. The contracting party is a global server assembly manufacturer (EMS), and the end customer is presumed to be a hyperscaler, different from the one in the previous contract.

Researcher Park noted, “While demand for small, high-capacity MLCCs for AI servers is growing rapidly, only a handful of companies—such as SamsungElectroMechanics and Murata—are capable of supplying them reliably.” He added, “In particular, we understand that this contract was signed at a higher price point than the previous one, even though it involves the same product. This represents an increase in the contract price for the same item within just one month.”

He continued, “While the previous contract demonstrated the hyperscaler’s awareness of MLCC supply risks, this contract shows that the supplier’s bargaining power has strengthened.” He assessed, “Although it is common for long-term agreements (LTAs) to involve some price concessions in exchange for guaranteed supply volumes, SamsungElectroMechanics appears to be securing both volume and price simultaneously.”

The analyst predicted that as the share of server-grade MLCCs expands, the need to scale back production of general-purpose MLCCs and to expand production capacity will also increase. With SamsungElectroMechanics’ MLCC capacity utilization rate reaching 95% as of the first quarter of this year, the server MLCC production volume—calculated based on the two long-term supply contracts—is equivalent to a production capacity of approximately 124.9 billion general-purpose MLCCs. This represents about 10.4% of the projected ceramic production capacity for 2027.

The report also assessed the move as highly profitable. iM Securities estimated the profit per unit at 0.2 won for general-purpose MLCCs and 5.4 won for server-grade MLCCs. Taking the production conversion ratio into account, the analysis found that allocating the same production capacity to server-grade products would result in revenue approximately 2.4 times higher and profits 9 times higher compared to general-purpose products.

Research Analyst Park stated, “A shift in the product mix toward server-grade products is a structure that can drive both revenue growth and improved profitability even without an increase in shipment volume,” adding, “Although the stock price has corrected by 39% from its peak due to concerns about the sustainability of the AI cycle, the direction of the industry and the company’s fundamentals remain unchanged.”

He added, “This contract is an example demonstrating that passive components are shifting from general-purpose parts to high-value-added parts based on long-term supply agreements,” noting, “As such contracts accumulate, visibility into demand for 2027–2028 will also increase.”