Samsung Electro-Mechanics announced on October 28 that it is expanding long-term supply contracts
Samsung Electro-Mechanics announced on October 28 that it is expanding long-term supply contracts for multi-layer ceramic capacitors (MLCCs) while forecasting a deepening supply shortage for flip-chip ball grid array (FC-BGA) substrates through the fourth quarter.
Samsung Negotiates Long-Term Supply Deals for Advanced MLCCs
Speaking at its third-quarter earnings conference call, Samsung Electro-Mechanics reported record quarterly financial results for the period. Alongside those figures, the company detailed its supply strategy for MLCCs, which act as electrical reservoirs within electronic systems. According to the company’s statements at the briefing, Samsung has finalized or is currently negotiating long-term supply agreements with roughly 50 corporate customers. These deals focus primarily on high-capacitance, high-voltage, and advanced components where market demand significantly outstrips current manufacturing capacity.
The surge in demand is driven largely by the global expansion of artificial intelligence infrastructure, particularly high-density requirements for AI data centers. Because advanced MLCC components destined for AI servers demand rigorous technical thresholds and reliable production volumes, only a select group of manufacturers possess the required capabilities. Samsung noted that scaling up this specialized production requires substantial lead times, pointing to prolonged market tightness.
These multi-year arrangements with major technology firms provide Samsung with predictable revenue streams and dedicated capital for facility expansions. Company officials projected that long-term agreements will account for more than half of total MLCC revenues by 2027.
AI Boom Triggers FC-BGA Substrate Supply Constraints
The broader artificial intelligence boom has simultaneously triggered severe supply constraints across semiconductor substrate lines, specifically for FC-BGA products. Samsung Electro-Mechanics stated that the shortage in the FC-BGA market will persist throughout the fourth quarter.
Industry-wide shifts toward advanced packaging—where multiple silicon dies are integrated onto a single substrate—have accelerated the trend toward larger surface areas and higher layer counts for FC-BGA components. These complex architectural demands consume existing factory output more rapidly than standard builds. Even with ongoing capacity investments across manufacturing sites in Sejong, Busan, and Vietnam, output struggles to keep pace with incoming requests.
Samsung reported receiving continuous requests from buyers for additional product allocation beyond current output capabilities. Management indicated plans to evaluate ongoing market conditions before committing to further investment scale and timelines. To preserve margins, the firm continues price negotiations with client partners while targeting revenue expansion that outpaces overall market growth.
Camera Modules for Autonomous Driving and Robotics
Beyond passive components and substrates, Samsung outlined growth trajectories for its camera module division, tying optical development directly to autonomous vehicles and commercial robotics. The company initiated mass production of camera modules intended for humanoid robots during the third quarter, while simultaneously developing successor hardware designed to improve sensing accuracy.
Collaboration with multiple corporate partners is underway to engineer integrated sensing modules that combine proprietary lens assemblies and actuator technologies. These systems aim to secure a dominant market share as automated machinery and robotics sectors continue to scale globally.