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Samsung Electro-Mechanics Focusing on MLCCs for Vehicles
A Business with High Growth Potential
Samsung Electro-Mechanics Focusing on MLCCs for Vehicles
  • By Kim Eun-jin
  • May 24, 2019, 14:41
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Samsung Electro-Mechanics is focusing on multi-layer ceramic capacitors (MLCCs) for vehicles as they have high growth potential.

Samsung Electro-Mechanics is focusing on multi-layer ceramic capacitors (MLCCs) for vehicles to fill the vacuum to be left by the planned transfer of its highly lucrative panel level package (PLP) business to Samsung Electronics.

PLP is an advanced chip packaging solution that packages a large number of chips at one time in a large panel state.

Samsung Electro-Mechanics is planning to hold a briefing session on MLCCs for analysts from securities firms at its MLCC plant in the Noksan Industrial Complex in Busan on June 12. The Busan plant is equipped with a dedicated production line for MLCCs for vehicles. Samsung Electro-Mechanics plans to introduce the growth potential of the MLCCs for automobiles to the stock analysts.

Samsung Electro-Mechanics has been stepping up its efforts to publicize its automobile MLCCs as they will replace its PLP business, which will be transferred to Samsung Electronics this June. MLCCs are the cash cow for Samsung Electro-Mechanics. Last year, they boosted the company’s operating profit to 1 trillion won.

Currently, most of the company’s MLCCs are for information technology (IT) devices. Sales of MLCCs for IT represented about 80 percent of the company’s total MLCC sales. Although MLCCs for automobiles account for less than 10 percent of the total sales now, they have huge growth potential. In particular, electric cars need MLCCs about five times more than current oil-powered vehicles. Samsung Electro-Mechanics is also eyeing the market for automobile MLCCs. "We will shift the focus of our MLCC business from MLCCs for IT to MLCCs for automobiles and other industrial sectors this year, and raise sales of MLCCs for the non-IT sector to one third of our total MLCC sales," the company said in an earnings conference call in January. .

New investment in production lines for MLCCs for vehicles is also expanding. Samsung Electronics's component solution business which operates the MLCC business, has invested 911.2 billion won in production facilities, more than twice the investment made last year. Most of the funds were used to build a new vehicle MLCC plant in Tianjin, China and expand the Busan plant.

In addition, some experts speculate that Samsung Electro-Mechanics may seek to acquire promising companies in the near future. This is because the company secured 785 billion won from the sale of its PLP business unit to Samsung Electronics. "I understand that Samsung Electro-Mechanics is considering making M&A deals internally," an industry analyst said.