Market Power
Samsung Electro-Mechanics (SEM) will build additional factories to produce multilayer ceramic capacitors (MLCC) in the Philippines. It seems to be the groundwork to meet the increasing demand and raise its market-dominating power.
MLCCs are high value-added products to help electricity stably flow by being used in smartphones, PCs, TVs, and home appliances. More than 500 MLCC parts are used in a single smartphone.
SEM announced on May 11 that it would invest 288 billion won (US$263.74 million) in its Philippines Corporation, including for the construction of a new factory. The corporation specializes in manufacturing MLCC products. This new factory will also produce MLCC products. Among a total investment of 288 billion won (US$263.74 million), 200 billion won (US$183.15 million) will be spent on the construction of the factory.
Thanks to this, SEM recorded the result that surpassed expectations in the first quarter. During the period, the company posted 1.7765 trillion won (US$1.63 billion) in sales and 60.8 billion won (US$55.68 million) in operating profits, 2.8 and 302 percent increases from a year earlier.
SEM is expecting that the expansion of the factory will strengthen its dominating power in the MLCC market. Currently, the company is competing to take first and second spots in terms of the global MLCC market share.
An official from SEM said, “The plan to build additional factories in the Philippines was already set up, and we are just making the investment in earnest this time. Aiming to start operation of new factory in the Philippines at the end of next month, we will begin construction from next month.”
Meanwhile, the demand of MLCC products will outstrip the supply in the second quarter as well as in the first quarter. Accordingly, the flow of SEM’s performance improvement is expected to continue for a considerable period of time.