Hana Securities on the 25th judged that Samsung Electro-Mechanics has entered the beginning of an upward cycle on the back of expanding demand for parts for artificial intelligence (AI) servers. It kept its "buy (BUY)" investment rating and raised the target price to 5.5 million won. The previous trading day's closing price of Samsung Electro-Mechanics was 437,000 won.
Kim Min-young, an analyst at Hana Securities, said, "A favorable operating environment is continuing, supported by a high won-dollar exchange rate and resilient AI server demand," and noted, "As MLCCs and FCBGAs for AI servers enter a structural growth phase, Samsung Electro-Mechanics has secured growth visibility through 2027."
Kim projected that Samsung Electro-Mechanics' first-quarter revenue this year will reach 3.0411 trillion won and operating profit 263.3 billion won. That would be up 11% and 31%, respectively, from a year earlier.
By business unit, the Components Business is maintaining an operating rate above 90% despite the off-season, and inventory has inched down to about four weeks from the previous quarter, the firm explained, while it viewed FCBGA as gradually increasing its operating rate. The optical solutions institutional sector is also expected to grow from the previous quarter thanks to the flagship launch effect at a strategic transaction customer, despite concerns about price pressure from rising memory prices.
In particular, it noted that as AI accelerator performance becomes more advanced, specifications for related components are also rapidly rising. Kim explained, "AI accelerator spec upgrades lead to higher MLCC and FCBGA specifications, which increases process burdens and makes supply and demand even tighter in a constrained supply environment."
In particular, Kim added, "Unlike in the past when consumer demand was the focus, this MLCC and FCBGA upcycle is based on enterprise demand (B2B) such as AI servers, so the cycle is highly likely to be prolonged."
Kim also said, "Starting in the second quarter, as IT set makers' inventory build accelerates in earnest, MLCC supply-demand tightness will intensify," and forecast, "Samsung Electro-Mechanics will also face a shortage of spare capacity starting in 2026, making additional expansion necessary from the second half of 2026."