With Samsung Electro-Mechanics effectively having sold out next year's production volume of flip-chip ball grid array (FC-BGA), it is said to plan to ramp up the utilization rate of its Vietnam production line to the maximum to meet demand. FC-BGA demand has surged, led by the global big tech corporations to which Samsung Electro-Mechanics succeeded in supplying. As FC-BGA demand continues to grow, some say Samsung Electro-Mechanics could carry out facility investments to expand production capacity. FC-BGA serves to securely mount semiconductors and transmit electrical signals and is regarded as a next-generation, high value-added substrate suitable for increasingly larger AI Semiconductor chips.
According to the industry on the 21st, Samsung Electro-Mechanics has secured Broadcom, Google, Tesla, Amazon and Apple as FC-BGA clients and is said to have finalized contracts for next year's volume that can be delivered with its current production capacity. While the domestic production base that manufactures FC-BGA is reportedly running at maximum utilization, the plan is understood to be to raise the utilization of the Vietnam production line to the maximum as well starting next year.
To restructure a business portfolio concentrated in IT devices, Samsung Electro-Mechanics has designated FC-BGA, a high value-added substrate mounted in AI Semiconductor chips along with artificial intelligence (AI) and automotive multilayer ceramic capacitors (MLCC), as a next-generation growth engine and has focused on nurturing the business. To expand FC-BGA production capacity, Samsung Electro-Mechanics invested about 1.3 trillion won in Vietnam in 2022.
As shipments to global big tech corporations get into full swing, Samsung Electro-Mechanics is reportedly planning to operate the Vietnam production line at effectively the maximum utilization next year as well. Although FC-BGA demand far exceeds supply in step with the expansion of AI Semiconductor production, the production capacity of FC-BGA manufacturers has not caught up. While FC-BGA suppliers such as Japan's Ibiden, the leaders, had reaped the gains as demand for AI Semiconductor chips surged centered on Nvidia, demand has diversified among global big tech corporations seeking to produce application-specific integrated circuits (ASICs) optimized for their own servers, and Samsung Electro-Mechanics' supply volume appears to be increasing as well.
With demand for FC-BGA climbing steeply, the possibility of adding more production lines is also being raised. An official in the electronic components industry said, "As TSMC's advanced packaging (CoWoS) production capacity has been aggressively expanded, previous supply constraints have been resolved, but FC-BGA demand going into advanced packaging has also increased sharply, creating a need for new capacity additions to respond," adding, "We will have to review market conditions after 2027, but if the current trend continues, the likelihood of expansion is indeed high."
With not only MLCC, the flagship product line, but also FC-BGA for AI Semiconductor applications, a high value-added product, expanding in supply, Samsung Electro-Mechanics' operating profit next year is projected to increase from this year. According to FnGuide, Samsung Electro-Mechanics' operating profit forecast for next year is 1.1501 trillion won, about a 29% increase from this year's forecast of 889.1 billion won. Oh Kang-ho, an analyst at Shinhan Investment & Securities, said, "Samsung Electro-Mechanics' revenue next year is expected to rise 13% year over year, and operating profit 33%," adding, "MLCC and package solution revenue is projected to grow 15% and 23% year over year, respectively. FC-BGA demand centered on global big tech corporations will also increase next year."