Samsung Electro Mechanics : 2017 2Q Earnings Release

Sales reached KRW 1.7098 trillion, business profits KRW 70.7 billion
- 8.9% sales increase compared to the 1st quarter of 2017, earnings shot up by 177%
- 5.8% sales increase compared to the 2nd quarter of 2016, earnings rose by 366%
- Increased supply of components because of full-scale production of strategic customer's flagship model
- Expansion of sales of MLCCs and new dual camera model of its Chinese client

2nd half of 2017, new business venture strengthens and profitability augments due to increasing proportion of high value-added products
- Expansion of sales of high-spec MLCCs and dual cameras of its Chinese client
- Reinforcing responsiveness of MLCC demand
- Full-scale mass production of RF-PCBs for OLED use
- Electrical device component lineup increase leads to expansion of new customers, mass production of the next-generation semiconductor package business (FO-PLP) for the first time

Samsung Electro-Mechanics announced on the 21st that its sales volume hit KRW 1.7098 trillion and its business profits KRW 70.7 billion in the second quarter. Sales went up 8.9% compared to the previous quarter and 5.8% compared to the same period last year. A sharp rise in earnings compared to the previous quarter and the same period last year.

Samsung Electro-Mechanics expanded its supply of high-spec MLCCs, HDIs for smartphones, and camera modules following a full-scale production of the Galaxy S8 model. Even the sales of dual cameras of its Chinese business client augmented. Therefore, its business results have greatly improved.

In the second half year, Samsung Electro-Mechanics is planning to gain more control of the market for major products, including substrates, chip parts, and camera modules, upon the successful launch of the new model of its strategic business client. Furthermore, because of the high-spec smartphones of its Chinese business client, Samsung expects to see a jump in the supply of its high value-added products (e.g., high-reliability MLCCs, dual cameras) and a continuous augmentation of its sales.

With this, the business for electrical devices has diversified the product lineup, including communication modules, high-reliability MLCCs, and system modules. Samsung Electro-Mechanics is planning to focus on enlarging its new customer base. In particular, with the kickoff of mass production in the 3rd quarter, the next-generation semiconductor package business (FO-PLP) aims to launch into all areas of the package, which includes AP.

※ Performances and Strategies by Sectors

[Digital Module] As the sales of the wireless charging module and the camera module of the strategic client's flagship model and the dual cameras with 2X optical zoom to Chinese customers went up, departments recorded a sales volume of KRW 835.5 billion, an 8% increase compared to the previous quarter. In the second half year, the strategy is to increase the sales volume by supplying new products of differentiated functions, depending on the outlook of expanding the use of dual cameras in smartphones.

[Chip Parts] As the supply of high value-added MLCCs to strategic clients and Chinese business clients went up, departments reached a sales volume of KRW 542.4 billion, an 11% increase over the previous quarter.
In the second half year, the strategy is to increase the sales of high-reliability products (for use in industries and electric devices) to the Chinese and European markets, and to increase the supply of high-capacity micro MLCCs to North America. On the other hand, the plan is to increase the supply to overseas production base, thus increasing profitability, depending on the outlook of expanding the demand for MLCCs.

[Board] As the supply of package substrates for AP and PC use to global customers went up, departments reached a sales volume of KRW 319.5 billion, a 9% increase over the previous quarter. In the second half year, the strategy is to gain more control of the high value-added motherboard market by establishing a mass production line for the next-generation HDIs and a full-scale mass production of RF-PCBs for OLED use.

※ Quarterly Management Performance

(unit: KRW billion)

Category	2016	2017		QoQ	YoY
	2Q	1Q	2Q
Sales	16,164	15,705	17,098	1,393↑	934↑
Operating Profit	152	255	707	452↑	555↑
Pre-Tax Profit	408	115	640	525↑	232↑
Net Income	165	22	333	311↑	168↑