Samsung Electro-Mechanics (009150.KS), a major supplier of high-value semiconductor substrates, has effectively sold out its entire 2026 production volume for flip-chip ball grid array (FC-BGA) substrates, according to industry sources on November 21. The surge is being driven by rapidly rising demand from newly secured global big-tech customers, prompting the company to maximize utilization across its facilities, including its Vietnam production base next year.

FC-BGA is an advanced semiconductor substrate used to secure chips and transmit electrical signals with high reliability. It is considered a next-generation, high-value substrate optimized for increasingly large and power-intensive AI accelerators.

Industry officials said Samsung Electro-Mechanics has finalized next-year FC-BGA supply contracts with major global technology companies, reportedly including Broadcom, Google, Tesla, Amazon, and Apple. With its domestic FC-BGA lines already operating at full utilization, the company plans to push its Vietnam production lines to peak capacity starting in 2026 to meet demand.

Samsung Electro-Mechanics has been restructuring its portfolio away from IT-focused components by prioritizing next-generation growth engines such as AI, automotive MLCCs, and high-value FC-BGA substrates used in AI semiconductors. To expand FC-BGA output, the company invested approximately KRW 1.3 trillion in its Vietnam base in 2022.

Global Big-Tech Orders Drive Multi-Year Sell-Out

Suppliers said that FC-BGA shipments to global hyperscalers are now accelerating. Demand is rising so rapidly that the company's FC-BGA capacity is reportedly fully reserved through 2027, supported by the addition of four new major big-tech customers.

Samsung Electro-Mechanics is shifting more of its substrate business toward AI servers: FC-BGA for AI applications accounted for 40 percent of its substrate mix in 2025 and is projected to climb to 50 percent in 2026. Vietnam's production transition and ramp-up will further strengthen the company's competitiveness in high-end substrates.

Tight FC-BGA Supply May Trigger Additional Capacity Investments

The global semiconductor supply chain continues to face severe FC-BGA shortages as GPU and ASIC production accelerates. Although TSMC has rapidly expanded its CoWoS advanced packaging capacity, the substrates needed for these processes remain in short supply, prompting expectations that Samsung Electro-Mechanics may pursue additional expansion.

"Given the pace of AI chip growth and the sustained increase in FC-BGA demand beyond 2027, new capacity additions are becoming increasingly likely," said an executive from the electronic components industry.

Earnings Outlook Strengthens on AI-Driven Substrate Growth

Alongside its core MLCC business, strong demand for FC-BGA substrates is expected to boost Samsung Electro-Mechanics' profitability next year. According to estimates from financial data provider FnGuide, the company's operating profit for 2026 is projected to reach KRW 1.1501 trillion, up roughly 29 percent from this year's estimate of KRW 889.1 billion.

Shinhan Investment analyst Kang-ho Oh said Samsung Electro-Mechanics' 2026 revenue is expected to grow 13 percent year-on-year, while operating profit is forecast to rise 33 percent—driven by a 15 percent increase in MLCC revenue and a 23 percent rise in package substrate sales. "FC-BGA demand from global big-tech customers will continue expanding next year," Oh said.