Samsung Electro-Mechanics, the electronics component arm of Samsung Group, reported mixed second-quarter results as surging demand from artificial intelligence servers failed to offset declining profitability across its operations.
The Suwon-based manufacturer posted revenue of 2.78 trillion won ($2.0 billion) for the quarter ended June, up 8% from a year earlier but barely changed from the previous quarter. Net income tumbled 25% year-over-year to 129.7 billion won ($93.4 million), reflecting margin pressures despite stronger sales.
AI servers consume 12.5 times more multilayer ceramic capacitors than conventional servers, driving robust demand for the company’s component division, which saw revenue jump 10% annually to 1.28 trillion won ($923 million). The packaging solutions unit, supplying substrates for AI accelerators, recorded the strongest growth with sales rising 13% to 564.6 billion won ($406 million).
However, the optics division, which supplies camera modules primarily to smartphones, declined 8% quarter-over-quarter to 939.3 billion won ($676 million) due to seasonal smartphone weakness.
Operating profit margin compressed to 7.6% from 8.2% a year earlier, suggesting the company is struggling to pass rising costs to customers despite benefiting from the AI infrastructure buildout. The firm maintained a strong balance sheet with 2.54 trillion won ($1.83 billion) in cash.
Management cited continued momentum in automotive electronics and AI server components for the current quarter, though smartphone seasonality may persist.
