[Edaily Reporter Kim Kyung-eun ] On the 29th, Hana Securities projected that profit estimates for SamsungElectroMechanics(009150)for 2027–2028 would be revised upward again based on large-scale investment in expanding flip-chip ball grid array (FCBGA) production capacity. Accordingly, the firm maintained its “Buy” rating and target price of 3 million won. Given the previous day’s closing price (1.49 million won), this implies the stock could double in value.

Kim Min-kyung, an analyst at Hana Securities, stated, “Starting with the third-quarter earnings season, we expect the company to re-enter a phase of upward revisions to its 2027–2028 profit estimates, driven by price hikes for multilayer ceramic capacitors (MLCCs) and FCBGAs, as well as expanded production capacity.”

SamsungElectroMechanics announced the previous day expansion investments totaling approximately 4.3 trillion won and 2.5 trillion won for its package substrate production facilities in Sejong and Vietnam, respectively. The Sejong investment includes both infrastructure and equipment costs, while the Vietnam investment covers only equipment costs, excluding infrastructure. Hana Securities estimated that the total investment scale would reach approximately 8.5 trillion won when the Vietnam infrastructure investment is included.

A key aspect of this investment is that customers are covering a significant portion of the investment costs and guaranteeing future order volumes. According to Hana Securities, the company plans to receive more than 70% of the total investment amount as advance payments, and it is understood that discussions with additional clients are currently underway. While investment terms vary by customer, they commonly include guarantees of required order volumes and minimum utilization rates, with contract terms ranging from 3 to 5 years.

He also noted that there is room for FCBGA prices to rise further. Although major global PCB manufacturers are undertaking large-scale capacity expansions, FCBGA lead times range from 48 to 56 weeks—significantly exceeding the normal level of 12 weeks. He explained that this represents the most severe supply shortage among all information technology (IT) components.

Analyst Kim predicted, “With the robust growth in demand for artificial intelligence (AI) accelerators and server central processing units (CPUs) continuing, and considering the production yields of next-generation PCBs such as embedded PCBs, the supplier-dominated market is expected to persist for the long term.”

Earnings forecasts have also been revised upward. Hana Securities projected SamsungElectroMechanics’ third-quarter revenue this year to reach 3.8345 trillion won, a 33% increase year-over-year, with operating profit rising 154% to 661.5 billion won. The operating profit margin is forecast at 17.3%. Analysts note that despite the weakening won-dollar exchange rate, price hikes for MLCCs and package substrates are driving the improvement in earnings.

Compared to previous forecasts, the third-quarter operating profit estimate has risen by approximately 10%, from 601.3 billion won to 661.5 billion won. The annual operating profit forecast for 2026 was raised from 2.0312 trillion won to 2.1054 trillion won, and for 2027, from 4.3325 trillion won to 4.7538 trillion won.

Prices for MLCCs are also expected to continue rising. SamsungElectroMechanics is set to negotiate annual supply contracts with automotive customers in late September through October. Analysts note that, given the company’s intention to limit the share of long-term supply agreements (LTAs) to less than 60–70% of total MLCC sales in 2027, supply-demand uncertainty among customers could intensify.

Analyst Kim stated, “SamsungElectroMechanics is currently negotiating MLCC prices with direct-supply clients, and given the high price-acceptance capacity of AI server clients, we expect price hikes that exceed market expectations.” He added, “For package substrates as well, steep quarterly price increases are taking place in a supplier-dominated market, so the trend of improving profit margins is expected to continue.”