Name: Substrates and MLCCs are Stronger than Jeonjanics | Chesley Investment Advisory Deputy Park Seong-gu & CEO Lee Seung-jun & Director Wang Seon-ryang [Chesley Official Membership / 26.08.27.Thu]
Uploaded: 2026-09-05T21:00:06+00:00
Duration: 2833 s

Speakers

Park Seong-gu — Manager

Lee Seung-jun — Analyst

Summary

Park Seong-gu reviews MLCC and substrate names, arguing the MLCC price-hike cycle has just begun and FCBGA substrate supply will tighten through 2028. He highlights Samsung Electro-Mechanics, Samwha Capacitor, and Simmtech as the strongest component plays. CEO Lee Seung-jun adds that IT portfolios concentrated in Samsung Electronics and SK Hynix may rotate into these component stocks. The speakers caution that these are cyclical growth waves requiring active exits.

MLCC price hikes started in April 2025, unlike memory which started in September 2024.
Supply is tight: channel inventory below 30 days and utilization above 95%.
AI server MLCC content and dollar content are rising sharply.
FCBGA substrate supply shortage is projected to deepen from 2026 through 2028 on Rubin and CPO demand.
Samsung Electro-Mechanics, Samwha Capacitor, and Simmtech are named as the strongest component stocks.
CEO suggests rotating from Samsung Electronics and SK Hynix into component names.
Growth-cycle investing requires monitoring ASP direction and exiting before margin peaks.

Ideas

Park Seong-gu Manager 0:00

MLCC price hike cycle just began

The MLCC price-hike cycle only began in April 2025, unlike memory which started in September 2024. Supply is tight with major makers below 30 days of channel inventory and utilization above 95%, while AI server MLCC unit content and dollar content are rising several-fold. Park argues the price increases are just starting, will likely continue for about a year, and stock peaks tend to follow about 15 months after the first hike, so the sector is only 2-3 months into an upcycle.

Park Seong-gu Manager 1:41

Samsung Electro-Mechanics earnings upside remains large

Samsung Electro-Mechanics is the leading MLCC and FCBGA substrate name; component operating margin is only 16-17% versus 38% in the prior cycle because LTA contract structure delays price hikes, and third-quarter earnings should begin confirming the lagged ASP gains. Morgan Stanley rotated its top pick from Samsung Electronics to Samsung Electro-Mechanics, with 2027-2028 operating profit estimates revised toward 5.7-8.3 trillion won, and further MLCC ASP hikes could push numbers higher.

Park Seong-gu Manager 6:56

FCBGA substrate supply shortage will deepen

FCBGA substrate strength is driven by product structure, not just negotiation: server/Rubin packages are roughly double the area with 20+ layers, and larger panels lower yields and effectively reduce supply; Ajinomoto Fine Techno's ABF film monopoly has implemented a 30% price increase; supply-demand models swing to an 8% shortage in 2026 and 34-51% in 2027-2028; CPO optical packaging should make ABF substrates even larger. Substrate stocks respond to ASP direction, not absolute earnings, so this pricing-power setup supports the group.

Park Seong-gu Manager 17:40

Samwha Capacitor benefits from MLCC tier-2

Samwha Capacitor is a little-covered tier-2 MLCC/condenser maker valued around 1 trillion won; tier-1 MLCC makers are converting capacity to AI server high-cap products and raising generic prices, which shrinks generic supply and benefits tier-2 players; its film capacitor business serves data centers/transformers and adds higher-margin growth. Q2 operating profit recovered to 8.6 billion won with double-digit margins, and Park sees 2028 operating profit of 120-200 billion won if price hikes are reflected, versus current estimates that ignore them.

Park Seong-gu Manager 23:28

Simmtech socket dominates NVIDIA Rubin ramp

Simmtech is the strongest listed socket play for NVIDIA's Rubin platform; socket capacity is about 40% utilized in Q2 but revenue is ramping from 11.5 billion won in Q1 to 25 billion won in Q2 and forecast 50 billion won in Q3 and 75 billion won in Q4. The company is expanding socket capacity for 2028 and holds roughly 60% of global socket capacity. Park estimates socket margins are far above the 12% company margin and could take overall operating margin toward 30%.

Lee Seung-jun Analyst 32:22

Rotate from memory leaders to component names

An IT portfolio heavily concentrated in Samsung Electronics and SK Hynix will broaden because component names are underowned, relatively cheaper, and have stronger near-term supply/demand; he suggests trimming Hynix exposure and rotating into Samsung Electro-Mechanics, Simmtech, and Samwha Capacitor. Samsung Electronics and SK Hynix look less favorable short-term on supply/demand.

Substrates and MLCCs are Stronger than Jeonjanics | Chesley Investment Advisory Deputy Park Seong-gu & CEO Lee Seung-jun & Director Wang Seon-ryang [Chesley Official Membership / 26.08.27.Thu]

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