Samsung Electro-Mechanics Q1 Profit Surges 40% on AI Substrate Demand

According to a report by The Korea Herald, this financial result surpassed the 271.5 billion won (approx. USD 185 million) that analysts previously expected for the period. The surge in earnings stemmed primarily from the demand for high-end semiconductor substrates used in AI accelerators, which represented the strongest growth area in the company's current portfolio.

Revenue for the quarter reached 3.21 trillion won (approx. USD 2.19 billion), marking a 17 per cent increase from the previous year and beating the market consensus of 3.09 trillion won (approx. USD 2.10 billion).

"The profit growth came despite a 71.4 billion won one-off retirement-related charge during the quarter. Stripping out the charge, operating profit would have approached 352 billion won, suggesting the underlying earnings momentum was stronger than the headline figure indicated," the report mentioned.

The Package Solutions division, which produces flip-chip ball grid array (FC-BGA) substrates, reported the most significant increase among the company's business lines. Sales for this segment rose 45 per cent year-on-year to 725 billion won (approx. USD 494 million). These specialized boards are essential for connecting processor chips to main circuit boards in servers.

Currently, only a small group of global companies, including Samsung Electro-Mechanics and firms in Japan and Taiwan, produce these components in high volumes.

"FC-BGA shipments expanded to AI accelerators, server CPUs and high-end network substrates for global big-tech customers," the report quoted the company.

The company also confirmed that it planned to begin volume shipments of network-use substrates to a new hyperscaler client during the second quarter, though it did not disclose the name of the customer.

In other segments, the components division, which manufactures multilayer ceramic capacitors (MLCC) for AI servers and advanced driver assistance systems, grew 16 per cent to 1.41 trillion won (approx. USD 960 million). The optical solutions business, which handles camera modules for smartphones, recorded a 5 per cent increase to 1.08 trillion won (approx. USD 736 million).

The report noted that management pointed to continued strength in industrial and automotive components for the April-June period, citing rising data center power consumption and broader ADAS adoption.

The earnings announcement followed a period of significant growth for the company's stock, which more than doubled in value over the last month. Shares closed at 827,000 won (approx. USD 563) on Wednesday, rising from 407,500 won (approx. USD 278) at the end of March, and traded as high as 835,000 won (approx. USD 569) on Thursday afternoon.

"Park Kang-ho of Daishin Securities said the company is on track for record annual results for a second straight year and flagged a possible MLCC price increase in the second half as the next catalyst," the report stated.

- ANI