SK Securities raised its target price for Samsung Electro-Mechanics (009150.KS) to 1.5 million won from 1.1 million won, a roughly 36% increase, citing rapidly growing demand for high-layer-count substrates used in artificial intelligence chips. The brokerage maintained a "buy" rating, judging that Samsung Electro-Mechanics stands to benefit most as the supply shortage persists.
"This cycle for flip-chip ball grid array (FC-BGA) semiconductor substrates is stronger than five years ago," Park Hyung-woo, an analyst at SK Securities, said in a report Tuesday. "AI big tech companies are even proposing direct investment support to secure their supply chains."
Park identified the increasing size of AI chip packages as a key variable. The substrate area for AI packages from global AI semiconductor companies is projected to grow by approximately 50% in 2026 from a year earlier, with 2027 products expected to expand another 50% from this year. By contrast, expanding supply capacity takes two to three years, making a structural supply shortage inevitable, he explained.
Substrate price increases are also gaining momentum. "During the previous substrate super cycle, supply prices rose 50% to 150% over two years," Park said. "The current average selling price (ASP) growth rate is still only at the early stage compared to that period."
Earnings forecasts have also been raised significantly. SK Securities expects Samsung Electro-Mechanics' 2026 operating profit to reach 1.567 trillion won, up 71.6% from a year earlier. Operating profit is forecast to expand to 2.353 trillion won in 2027. FC-BGA sales in particular are estimated to surge from 1.153 trillion won in 2025 to 2.625 trillion won in 2027.
The potential improvement in the multilayer ceramic capacitor (MLCC) business was also presented as a driver for the share price. "An MLCC shortage and price increases are expected in the second half," Park said. "Samsung Electro-Mechanics is the only company globally that can embed its own MLCCs into substrates."
Glass substrate technology was also evaluated as a differentiated strength of Samsung Electro-Mechanics. "The technology to mount silicon capacitors onto glass substrates is a strength unique to Samsung Electro-Mechanics that competitors do not possess," Park said. "Samsung Electro-Mechanics is at the center of changes in component technology."
