Weak IT Shipments Hit MLCC's Profitability, but Inventory Correction Progressing Well

Samsung Electro-Mechanics, or Semco, is the global second supplier of multilayer ceramic capacitors, or MLCCs, which account for 45%-50% of Semco’s revenue and 70%-80% of operating income. MLCCs are necessary to stabilize and control electric flow, and thus necessary for all electronic circuits. We believe the robust demand for MLCCs, mainly from smartphone and automotive manufacturers, will be the driver of Semco’s growth in the midterm.