KB Securities on the 13th said Samsung Electro-Mechanics will be a key beneficiary in the era of "physical AI," where artificial intelligence (AI) expands into machines that move in the real world. It maintained a Buy rating and raised its target price to 370,000 won from 350,000 won. The previous trading day's closing price for Samsung Electro-Mechanics was 279,000 won.
Lee Chang-min, an analyst at KB Securities, said, "Demand is rapidly growing in high value-added new markets such as AI servers and Humanoid Robot," adding, "Accordingly, Samsung Electro-Mechanics' mid- to long-term earnings growth potential will be further strengthened." KB Securities raised its compound annual growth rate (CAGR) estimate for Samsung Electro-Mechanics' future operating profit to 27% from 22%.
The analyst said in particular that multilayer ceramic capacitors (MLCC) and semiconductor packaging substrates will directly benefit from expanding AI demand. AI servers require large volumes of high-performance, high-reliability components, and Samsung Electro-Mechanics is competitive in this area, the analyst said. The analyst said, "The MLCC and institutional sector are highly likely to enter a 'supercycle (boom phase)' in 2026–2027."
If the physical AI market fully opens, robot-related gains are also expected. The analyst said, "Samsung Electro-Mechanics is likely to supply key components such as MLCCs, camera modules, and substrates not only for electric vehicles but also for Tesla's Humanoid Robot 'Optimus.'" The analyst also estimated the company will supply MLCCs and camera modules for competitor Boston Dynamics' Humanoid Robot "Atlas." Looking ahead, based on its motor and drive technology, the analyst said business expansion into higher value-added areas such as robot hands is also possible.
The analyst also cited potential windfall gains from worsening China-Japan relations. The analyst said, "As the Chinese government has used rare earths as a diplomatic weapon against Japan for the first time in 16 years since the 2010 Senkaku Islands clash, concerns are growing over Japanese companies that are highly dependent on Chinese rare earths," adding, "High-reliability MLCCs require rare-earth additives, and supply-demand uncertainty could lead to production disruptions in MLCCs, which is highly likely to translate into windfall gains for Samsung Electro-Mechanics."
Meanwhile, the analyst projected Samsung Electro-Mechanics' fourth-quarter results last year at 2.9 trillion won in revenue and 230.6 billion won in operating profit. Those would be up 16% and 101%, respectively, from a year earlier. The analyst said, "Despite the off-season, the results are peak-season level," adding, "With a favorable won-dollar exchange rate trend and a rising share of high value-added components such as AI server and automotive parts instead of IT components, seasonality was diluted."