Samsung Electro-Mechanics is 62% off its June peak even as capacitor waits hit 61 weeks

Samsung Electro-Mechanics▼−3.50% — Samsung Electro-Mechanics, down 3.50 percent today, the Samsung affiliate whose capacitors and chip-packaging substrates sit inside AI servers, closed at 862,000 won on November 13, about 62 percent below the 2.27 million won intraday peak it set on June 19 ¹. Samsung Electronics▼−0.96% — Samsung Electronics, down 0.96 percent today fell about 43 percent over the same span, SK hynix▼−5.27% — SK hynix, down 5.27 percent today about 58 percent ¹.

Korea's press blames the slide on the November 3 US midterm elections, which handed Democrats control of Congress and stoked fears of tighter data-center rules, and on doubts about the returns on AI investment ¹².

The order book says shortage, not slump

The quarter the market is discounting was the company's best ever: revenue of 3.76 trillion won, up 30 percent, and operating profit of 691 billion won, up 166 percent↗ ¹³.

Lead times for seven of its MLCC items, the ceramic capacitors that steady power flow inside a server, stretched from 29–31 weeks at end-July to 61 weeks in October at distributor Digi-Key, against an industry norm of about 12 weeks, as we reported on November 11 ⁴. The 47-microfarad parts used in AI servers have been out of stock since August, with restock due in January↗ ⁴.

Prices rose for some direct customers this quarter, DIGITIMES reported a planned 30 percent increase in September↗, and about 50 customers have signed or are negotiating long-term deals covering more than half of next year's MLCC sales ⁴⁵.

Customers are paying for capacity

On November 12, chief executive Chang Duck-hyun broke ground on a 4.27 trillion won substrate plant in Sejong, South Korea↗, targeting mass production in September 2028 ⁶. It is the largest piece of a 6.78 trillion won expansion approved in September, alongside 2.51 trillion won for Vietnam, a program The Inference sized at about $5 billion on October 21 ⁶⁷.

Nvidia▼−3.21% — Nvidia, down 3.21 percent today is co-funding dedicated lines at Sejong and Busan under a October 21 agreement, as we reported on October 24; neither company disclosed the amount ⁷. Chang has said demand for server substrates runs more than 50 percent above capacity ⁷.

The worry is orders dry up before the plants open

The worry is that data-center orders dry up before the new plants open. Bloomberg chief economist Tom Orlik notes that most US data centers planned through 2028 sit in states that held midterm votes, and that governors reading voter anger over the local power and water bills data centers bring could slow construction, cutting Korean suppliers' orders ⁸. Analysts cited by Reuters doubt any bill could meaningfully stall the buildout ².

Shinhan Securities still projects the MLCC division's operating margin rising from 10 percent in 2024 to 31.5 percent in 2027 ⁹. The market is pricing the end of a boom whose parts are still on a fourteen-month back order. The January restock, and whether the long-term contracts hold, will say which side is right; Sejong pays nothing until September 2028 ⁴⁶.