Samsung Electro-Mechanics recorded results below market expectations due to sluggish IT demand in the fourth quarter of last year. The company plans to increase the supply of multilayer ceramic capacitors (MLCCs) and flip-chip ball grid arrays (FC-BGAs) by focusing on the rapidly growing demand in the artificial intelligence (AI) and automotive markets, thereby boosting revenue.
Samsung Electro-Mechanics reported on the 24th that it recorded 2.49 trillion won in revenue and 115 billion won in operating profit in the fourth quarter of last year. While operating profit slightly increased compared to the same period last year (110 billion won), it fell about 18% short of the initially projected operating profit target (140 billion won) by the securities industry. For the year, the company recorded revenue of 10.29 trillion won and operating profit of 735 billion won, surpassing 10 trillion won in revenue for the first time last year.
A representative from Samsung Electro-Mechanics noted, "The increase in demand for high-value products such as automotive and servers led to a rise in sales and operating profit compared to the same period last year with expanded supply of automotive MLCCs and server FC-BGAs. The strong demand for AI servers is expected to continue, and the growth of the automotive electronics market is also anticipated to persist. As a result, we expect operating profit in the first quarter of this year to record a growth rate of over double digits compared to both the previous quarter and the same period last year."
By institutional sector, the component sector's fourth quarter revenue was 1.08 trillion won, an increase of 11% compared to the same period last year. Samsung Electro-Mechanics explained that supply of automotive MLCCs increased due to growing demand for electric vehicles (EVs), hybrids, and the expansion of advanced driver-assistance systems (ADAS). However, revenue decreased compared to the previous quarter due to seasonal factors, including inventory adjustments by client companies at year-end.
Samsung Electro-Mechanics explained that big tech companies and automakers are expanding automotive features related to autonomous driving, leading to an expected increase in demand for AI servers and automotive MLCCs. The company plans to timely respond to demand by expanding its lineup of high-temperature, high-capacity products for AI servers and high-temperature, high-pressure components for EV powertrains, while continuously increasing sales in the AI server and automotive sectors through enhanced production capacity of automotive MLCCs.
The package solution sector's fourth quarter revenue was 549 billion won, a 24% increase compared to the same period last year. Samsung Electro-Mechanics stated that while performance improved compared to last year due to expanded supply of FCBGA for global server and network clients, sales decreased compared to the previous quarter due to inventory adjustments for smartphones at year-end.
Samsung Electro-Mechanics plans to expand supply of high-value package substrates for ARM processors and servers and networks, as improvements in IT set demand and sustained high growth in AI and server-oriented packages are anticipated this year. In particular, the company aims to commence mass production of FC-BGA for AI accelerators, while implementing a strategy to diversify its clients.
The optical solution sector's fourth quarter revenue recorded 861.2 billion won, a 2% decrease compared to the same period last year. Samsung Electro-Mechanics explained that the slight decline in revenue was due to inventory adjustments at year-end before the launch of new models from major automotive clients.
To differentiate its smartphones, Samsung Electro-Mechanics is responding in a timely manner to the ongoing demand for high-performance cameras, and plans to expand the supply of high-resolution slim camera modules with enhanced zoom functionality for IT applications, as well as all-weather camera modules and in-cabin camera products that are highly reliable for automotive use, to sustain business growth.