Samsung Electro-Mechanics doubled its profit on Nvidia, and the deal cuts both ways
Samsung Electro-Mechanics doubled operating profit on AI parts and handed Nvidia a large slice of its 2028 substrate capacity, then opened price talks. The visibility is real; so is the dependence.
Vincent Jiang · 3 min read
Samsung Electro-Mechanics opened its books on October 28 and showed the AI rebuild paying in cash, not promises: record quarterly revenue of 3.76 trillion won, up 30.3 percent from a year earlier, and operating profit of 691 billion won, up 165.5 percent, on a preliminary filing 1. The operating margin doubled to 18.4 percent from 9.0 percent 1. Shares in the KOSPI-listed component maker, which supplies chip-packaging substrates, multilayer ceramic capacitors (MLCCs) and camera modules, traded 11 percent higher at 1,333,000 won in midday trading in Seoul as of 12:44 p.m. 1.
One customer now sizes the factory
The same day confirmed the signed terms of its strategic partnership with Nvidia, first disclosed on October 21: dedicated ABF package-substrate lines at Sejong and Busan in South Korea, deliveries from 2026, double-digit annual supply growth, and by 2028 Nvidia−2.21% — Nvidia, down 2.21 percent today taking a significant portion of total annual substrate capacity 2. That clause sizes the factory around one buyer's product roadmap. A parts maker that once sold to whoever called now plans capacity to a single customer's specification.
Package substrates, not the legacy business, set the pace of the quarter
Data
| Value | |
|---|---|
| Operating profit | +165.5% |
| Package substrate sales | +58% |
| Components sales | +36% |
| Total revenue | +30.3% |
The shortage is doing the pricing
The earnings call added leverage. Fourth-quarter shipments of ultra-large AI-server substrates will double 5. FC-BGA substrate capacity is falling short of the volumes customers request, and the company is opening price talks citing raw material costs and tight supply 6.
Long-term supply contracts are set to cover more than half of 2027 MLCC sales 4. Capex will rise above the roughly 680 billion won flagged in September, with a 1.5 trillion won silicon-capacitor contract from May in hand 7. The package division grew sales 58 percent to 938 billion won; components grew 36 percent to 1.88 trillion won, on a more than 40 percent share of the AI-server MLCC market 3.
The buyer holds the lease
The bull case is a locked-in 2027 4. The bear case is who holds the lock. Nvidia is not betting on one supplier: it is funding Ibiden's Ono plant in Japan with a multibillion-dollar capacity reservation advance and backing Unimicron's substrate expansion in Taiwan under a separate reservation agreement, all part of a plan to lift its total substrate capacity 2.5 times over three years 9.
Samsung Electro-Mechanics is one line in that list. The price already leans far ahead of the print: the analyst mean compiled on MarketScreener across 27 analysts sits 99.8 percent above the last close of 1,201,000 won, and the stock traded at 1,333,000 won on the results 8. Watch the FCBGA price talks: if the hikes stick, the visibility is real. If Nvidia's next roadmap shrinks, a factory built to one customer's specification has few other buyers for it.
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More about NVIDIA
NVDA · Fiscal Q2 2027Revenue rose 106% to $96.2B, 92.5% of it from Data Center, “driven by the ramp of our Blackwell Ultra infrastructure”. Gains on equity stakes of $7.8B lifted net income to $59.7B.
Show as a table
| Line | Value |
|---|---|
| Revenue | $96.2B |
| Gross margin | 75.0% |
| Operating margin | 66.2% |
| Net income | $59.7B |
| Hyperscale | $48.7B |
| AI clouds & enterprise | $40.3B |
| Data Center | $89.0B |
| Edge Computing | $7.2B |
| Gross profit | $72.1B |
| Cost of revenue | $24.1B |
| Other income | $7.8B |
| Operating income | $63.7B |
| Operating expenses | $8.4B |
| Tax | $11.8B |
| R&D | $7.1B |
| SG&A | $1.4B |
