Samsung Electro-Mechanics jumped more than 6% early in the session to hit a record high, as expectations grew that the multilayer ceramic capacitor (MLCC) and packaging substrate markets will enter a prolonged boom, improving investor sentiment.
As of 9:46 a.m. on the 19th, Samsung Electro-Mechanics was trading at 2,339,000 won on the Korea Exchange, up 6.32% from the previous session. Intraday, it climbed to 2,358,000 won, setting a new all-time high.
KB Securities maintained its "Buy" rating on Samsung Electro-Mechanics and raised its target price to 3 million won from 2.2 million won.
Securities firms said demand for MLCCs and packaging substrates is rising rapidly with increased investment in artificial intelligence (AI) servers, while supply growth is limited, leading to an expected shortage for at least two years. Few companies have the capacity to produce high-capacity MLCCs and large-area packaging substrates used in AI servers, and securing Production yield is also difficult.
Lee Chang-min, an analyst at KB Securities, said, "We believe expectations for the MLCC and packaging substrate markets remain undervalued," and noted, "We also expect to benefit from the China-Japan conflict."
Lee said, "For both MLCCs and packaging substrates, the number installed per server rack is expected to more than double for the time being," adding, "By contrast, the number of companies with the capacity to produce high-capacity MLCCs for AI servers and large-area packaging substrates is limited, and with low Production yield, supply is increasing at a constrained pace."
Shares across the related value chain are rising alongside Samsung Electro-Mechanics. HanWool Semiconductor, an MLCC inspection equipment maker, hit the intraday upper limit, while related stocks such as AVATEC are also strong.