SAMSUNG ELECTRO-MECHANICS

◇ Turnover of KRW 1,812.2 billion, and operating profit of KRW 96 billion 
   - Turnover has decreased by 19% and operating profit by 42% compared to previous quarter (1Q 2020)
    · Decrease in module sales due to impact of COVID-19 and seasonality (off-season)
   - Turnover decreased by 5% and operating profit by 41% compared to same period in the previous year (2Q 2019)
    · Weak mobile market demand due to decrease in MLCC ASP and spread of COVID-19
 
◇ New product releases for key accounts and increase in supply of 5G components in the second half of this year
 
□ As of the 2nd quarter, Samsung Electro-Mechanics announced on the 28th that it recorded turnover of KRW 1,812.2 billion and operating profit of KRW 96 billion on a consolidated base. Compared to the previous quarter (1Q 2020), turnover decreased by KRW 412.3 billion (19%) and operating profit by KRW 68.6 billion (42%). Compare to the same quarter in the previous year (2Q 2019), turnover decreased by KRW 104.8 billion (5%) and operating profit by KRW 67.8 billion (41%).
 
□ Due to the impact of COVID-19 and seasonality, Samsung Electro-Mechanics’ camera and telecommunication module supply decreased compared to the previous quarter, and compared to the same quarter of the previous year, operating profit decreased due to weak demand for mobile due to the decrease in MLCC ASP (average sales price) and COVID-19.
 
□ In the 2nd half of this year, despite uncertainty in a resurgence of COVID-19, its profits are expected to improve for certain components. For the camera module, with the expansion of supply of high-spec cameras for new flagship models, earnings are expected to improve compared to the 2nd quarter, but due to the impact of COVID-19, it will not likely be as high as the same quarter of the previous year. Supply for MLCC, semiconductor package substrates, and RFPCB are expected to grow with new model releases by key accounts, expansion of 5G, and increase in demand for PC and game sets.  

 
[Results by Quarter]

(Unit : KRW 100 million) 

□ 2Q result and forecast by business unit
 
The Components Unit showed an increase in MLCC turnover despite the impact of the Philippine lock-down as a result of COVID-19, but the overall business turnover decreased by 2% compared to the previous quarter as a result of a decrease in supply for electric devices. However, due to the increase in MLCC supply for PC, server, and game sets related to untact services, revenue increased by 7% compared to the same quarter of the previous year to KRW 839.6 billion.
In the 2nd half of this year, the small and high-capacity MLCC market is expected to grow with the release of new flagship smartphones and the spread of 5G, and PC and game set product demand is expected to maintain strong demand.
 
The Module Unit recorded revenue of KRW 604.8 billion, which was a 38% decrease compared to the previous quarter and 27% decreased compared to the same period of the previous year, as a result of a decrease in camera module and telecommunication module supply for its strategic accounts.
Although set demand is somewhat uncertain for the 3rd quarter due to the impact of COVID-19, the company plans to increase sales for high-spec cameras with high resolution, optical zoom functions and newly supply 5G antenna modules.
 
2rd quarter turnover for the Substrate Unit decreased by 4% compared to the previous quarter due to a decrease in OLED RFPCB supply, but due to an increase in PC CPU and graphic DRAM package substrates, it recorded revenue of KRW 367.8 billion, which is a 20% increase compared to the same quarter of the previous year.
In the 2nd half of this year, the company expects RFPCB revenue to grow with the release of new flagship smartphones, and it also plans to increase 5G substrate supply, including antenna and SiP substrates.

[Turnover by Business Unit]

(Unit : KRW 100 million)