Samsung Electro-Mechanics jumped more than 8% early on the 21st. Buying surged on news that it signed a contract to supply silicon capacitors, a semiconductor device for high-density energy storage, to a U.S. big tech company.
As of 9:31 a.m. that day, Samsung Electro-Mechanics was trading at 1.15 million won, up 89,000 won (8.39%) from the previous session on the Korea Exchange. It rose to as high as 1.219 million won early in the session, setting an all-time high.
Samsung Electro-Mechanics disclosed the previous day that it signed a contract to supply about 1.557 trillion won worth of "silicon capacitors" to a global large corporation. The contract period is two years, from January next year to December 2028.
Under a confidentiality clause, the counterparty will not be disclosed before the contract expires, but the industry views it as one of the U.S. big tech corporations. Samsung Electro-Mechanics' major customers include Nvidia, AMD, Amazon and Marvell.
Silicon capacitors are built into high-performance semiconductors such as graphics processing units (GPUs) for artificial intelligence (AI) servers and High Bandwidth Memory (HBM) to improve the stability of power delivery.
KB Securities raised its target price for Samsung Electro-Mechanics to 1.6 million won from 1.4 million won.
Lee Chang-min, an analyst at KB Securities, said, "Samsung Electro-Mechanics plays a fabless (chip design) role in the silicon capacitor business, so if it only handles design and testing, revenue can be large and grow quickly even without additional manufacturing facility investment."
In particular, given the very high unit price of silicon capacitors, the related operating margin for Samsung Electro-Mechanics was estimated to exceed 30%.
The analyst added, "Explosive growth in results related to silicon capacitors is expected, backed by high market growth ahead and an expanding customer base," and "in particular, the embedded substrate that integrates silicon capacitors inside the packaging substrate will become a product unique and powerful to Samsung Electro-Mechanics."