[Edaily Reporter KIM YOON-JEONG ] KIWOOM Securities assessed that SamsungElectroMechanics(009150)is seeing increased visibility regarding medium- to long-term volume securing and revenue growth through the expansion of its flip-chip ball grid array (FC-BGA) substrate production capacity and long-term supply agreements (LTAs) for artificial intelligence (AI) and server-grade multilayer ceramic capacitors (MLCCs). The firm maintained its “Buy” investment rating and target price of 2.8 million won.

On the 29th, Kwon Min-kyu, an analyst at KIWOOM Securities, stated regarding SamsungElectroMechanics, “With the recent announcement of an LTA for AI and server-grade MLCCs, coupled with this announcement of FC-BGA capacity expansion, the company’s mid- to long-term growth prospects beyond 2027 are becoming clearer, and earnings forecasts continue to be revised upward.”
In particular, the firm noted that since this FC-BGA expansion is based on secured customer demand, it is significant in that it ensures visibility on long-term supply volumes through 2032. According to the announcement, the investment amounts total 6.78 trillion won, comprising 4.27 trillion won for the Sejong plant in South Korea and 2.51 trillion won for the Vietnam facility. Including infrastructure in Vietnam and complementary expansions at the Busan plant, the total scale of additional expansion is expected to reach approximately 9 trillion won.
As a result of the expansion, production capacity (CAPA) based on FC-BGA sales is estimated to grow from the projected 2.2 trillion won in 2026 to over 6 trillion won by 2029, assuming full operation. Shipment volumes are expected to roughly double. The impact of the expanded production volume on earnings is expected to begin in earnest in the third quarter of 2028, and production capacity is projected to increase by 20–30% in 2027 through supplementary expansions.
Analyst Kwon stated, “The expansion is intended to meet supply volumes for numerous hyperscalers and AI factory clients,” adding, “We understand that the majority of the expansion costs will be covered by client support and LTAs, so no separate financing is required.”
Earnings are also expected to exceed market expectations. SamsungElectroMechanics’ third-quarter revenue this year is projected to reach 3.7754 trillion won, a 31% increase year-over-year, while operating profit is expected to rise 158% to 671 billion won. The operating profit margin is projected to be 18%, exceeding the operating profit consensus of 626.6 billion won. Analysts noted that despite the weakening exchange rate, continued price hikes driven by tight market conditions and an expanding share of high-value-added products will enable a greater-than-expected improvement in profits.
For MLCCs, the firm projected that the third-quarter operating profit margin would rise to 22% from 17% in the previous quarter, driven by price hikes for distributors and direct customers, as well as an increased share of high-value-added products. The firm explained that while price increases due to supply shortages continue amid rising demand and adoption rates for AI and server applications, the current MLCC lead time of 32 weeks significantly exceeds the normal level of 12 weeks. Consequently, it further raised its 2027 MLCC operating profit forecast by 22%.
For FC-BGA as well, the operating profit margin is expected to rise from 21% in the previous quarter to 32%, driven by further price increases and a growing share of AI and server-oriented volumes. Analyst Kwon noted, “The market continues to be supplier-dominated, fueled by reduced supply capacity due to the production of high-layer-count and large-area substrates, coupled with explosive demand growth.” He explained that while prices are rising by 10–20% per quarter, lead times for ABF substrates are also at 48–56 weeks, significantly exceeding the normal level of 12 weeks. Accordingly, the operating profit forecast for FC-BGA in 2027 was also raised by an additional 9%.
The firm also projected that growth would continue quarter-over-quarter in the fourth quarter, defying typical seasonal trends. Analyst Kwon predicted, “While the fourth quarter typically sees a seasonal decline compared to the previous quarter due to customer inventory adjustments, growth is expected to continue in the fourth quarter of this year, driven by strong customer demand.”
He added, “We believe the premium associated with MLCCs and FC-BGAs—the component groups set to benefit most from AI infrastructure investment—has not yet been fully reflected in the stock price,” and maintained a “Buy” rating.