Samsung Electro-Mechanics tightens supplier ties to accelerate AI and automotive growth

Samsung Electro-Mechanics is tightening its grip on suppliers as it pushes deeper into AI infrastructure and automotive electronics, sending chief executive Jang Deok-hyun to a partner factory in Yangsan on 2 September, just one day after the company disclosed its biggest-ever long-term MLCC supply deal for AI servers. The visit underlined a message the company has been repeating with growing urgency: that its next phase of growth will depend not only on its own design and manufacturi...

The meeting was held at the headquarters of Hwaine Technology, a member of Samsung Electro-Mechanics’ supplier council, with about 40 supplier chiefs joining Jang and other senior executives. Yonhap said the company presented the event as part of a broader effort to expand communication on the ground, while Asia Business Daily reported that invitations were widened beyond the existing council to include more companies from the Gyeongsang region, giving Samsung a way to hear from suppliers outside the Seoul metropolitan area. (yna.co.kr)

The forum itself was structured less as a ceremonial stop than as a working session. According to Edaily and Global Economic, it began with supplier introductions, moved to a question-and-answer session with the chief executive, and ended with a tour of the production line. During the discussion, Jang outlined the company’s current business conditions and the priorities of each division, with the conversation ranging from growth strategy and new product roadmaps to the outlook for overseas markets. He told participants, “The realization of future industrial technologies is only possible when backed by the competitiveness of components and materials,” adding, “Let’s secure core technologies based on close trust and cooperation and create growth opportunities in the global market.” (en.edaily.co.kr)

Why the supplier push matters is visible in the company’s order book. On 1 September, Samsung Electro-Mechanics announced a long-term agreement to supply AI-server multilayer ceramic capacitors from January to December 2027. The company’s Korean newsroom put the contract value at Won 1.0722tn, or about $780m. Yonhap’s English service, however, reported the same deal at Won 1.72tn, or about $1.25bn. Both accounts agreed that the customer is a US-based client whose identity has not been disclosed and that the agreement is the largest MLCC supply contract in the company’s history. (samsungsem.co.kr)

Industry reports suggest the stakes are large because AI servers consume far more of these tiny components than conventional machines. Maeil Business Newspaper reported that an AI server can use more than ten times as many MLCCs as a standard server, while TrendForce said the latest contract takes Samsung Electro-Mechanics’ publicly disclosed AI-related long-term agreements to Won 3.32tn this year. Maeil also said the company now has supply arrangements with about 10 global customers and estimated that Samsung holds more than 40% of the AI-server MLCC market, against roughly 25% of the broader global MLCC market. (mk.co.kr)

That shift is already showing up in earnings. In its second-quarter 2026 results, Samsung Electro-Mechanics said consolidated revenue rose 24% year on year to Won 3.4572tn, while operating profit jumped 107% to Won 440.4bn. Sales in the components division, which includes MLCCs, climbed 29% to Won 1.6494tn, helped by stronger demand from AI servers, networks, data centres and automotive applications. The company also said it had begun mass production of new substrates for AI accelerators and server CPUs and was responding to additional requests for long-term MLCC contracts from major customers. (samsungsem.com)

Against that backdrop, the supplier forum looked like an attempt to lock in execution across a network that is both large and longstanding. Samsung Electro-Mechanics says it works with about 900 suppliers at home and abroad, with around 40 core domestic parts makers in its council, known as Hyupbuhoe, which was formed in 1986 and is now marking 40 years. Kwon Hyuk-seok, chief executive of MK Chem & Tech and chair of the council, said in remarks carried by Edaily that “It is greatly encouraging that SamsungElectroMechanics’ management visited the manufacturing sites in person to share their vision for the future and listen to the voices of the front lines,” adding that suppliers would pursue “technological innovation and rigorous quality control”. (en.edaily.co.kr)

The company says the next step is to turn those conversations into practical support. Under an agreement signed last year with the Korea Commission for Corporate Partnership, Samsung Electro-Mechanics has committed Won 200bn over 2025 to 2027 for supplier assistance, including finance through a shared-growth fund, factory-floor improvements aimed at productivity and quality, and specialised as well as job-level training. Edaily said the company has received the top grade in the country’s shared-growth index for two consecutive years. Samsung now says feedback from the Yangsan visit will be used to draw up tailored support measures for individual partners, suggesting the supplier tour was not a one-off display of goodwill but part of a more systematic effort to reinforce the chain behind its AI and automotive expansion. (en.edaily.co.kr)

Source: Noah Wire Services