The AI wave is not only driving explosive demand for core components such as GPUs, HBMs, and advanced packaging, but is also spreading to the upstream of the industry chain. As an indispensable basic component of electronic devices, passive components have recently ushered in a new round of prosperity, with multilayer ceramic capacitors (MLCCs) showing the strongest demand.

Benefiting from continued growth in demand for applications such as AI servers, data centers, high-end smartphones, and automotive electronics, leading Japanese passive component manufacturers Murata Manufacturing, Taiyo Yuden, and South Korea's Samsung Electro-Mechanics have all raised their earnings forecasts and accelerated their capacity expansion.

In recent years, due to the sluggish consumer electronics market and industry supply-demand adjustments, major Japanese and South Korean passive component manufacturers have adopted a cautious expansion strategy. However, with the significant increase in the use of MLCCs per unit in AI servers and the rapid growth in demand for high-capacity, high-reliability MLCCs, manufacturers have begun to restart capital investment, and new capacity is expected to be released gradually around 2027.

According to reports, Taiyo Yuden recently followed Murata in raising its financial forecast and plans to start construction of its new Malaysian plant ahead of schedule to cope with the growth in AI-related orders. Meanwhile, Samsung Electro-Mechanics' new MLCC plant in Calamba, Philippines, will also enter the mass production stage ahead of schedule, with new capacity expected to be gradually released starting next year.

MLCC

Multilayer ceramic capacitors (MLCCs) are crucial components in electronic devices used for storing electrical charge and stabilizing voltage, widely used in smartphones, automobiles, servers, power modules, and other fields. With the rapid development of AI infrastructure, the demand structure for MLCCs is changing.

Compared to traditional servers, AI servers incorporate more GPUs and accelerator cards, resulting in more complex power supply designs and higher demands for power stability and transient response. Therefore, they require a greater number of higher-specification MLCCs.

Especially in AI GPUs, CPUs, switching chips, and high-speed computing platforms, high-capacity, small-size, and high-reliability MLCCs have become critical requirements. Some AI server platforms already use significantly more MLCCs than traditional servers.

Furthermore, new energy vehicles and intelligent driving systems continue to increase the demand for MLCCs. The increasing demand for high-temperature resistant and high-reliability MLCCs in automotive electronic systems has made high-end MLCCs a key focus for Japanese manufacturers.

Recent financial data from Taiyo Yuden

Taiyo Yuden's recent financial data shows a significant improvement in its MLCC (Multi-Layer Ceramic Capacitor) business.

In the second quarter of this year (April to June), Taiyo Yuden's MLCC order value increased substantially, with a book-to-bill ratio reaching 1.72, indicating that order growth significantly exceeded shipment capacity. This indicator has exceeded 1 for the third consecutive quarter, showing continued expansion in market demand.

Taiyo Yuden expects its factory utilization rate to further increase to around 95% in the third quarter of this year (July to September), with capacity utilization approaching full capacity.

Faced with structural growth driven by AI demand, the company is also expanding its capital investment plan. Taiyo Yuden has increased its full-year capital expenditure to 42 billion yen, while adjusting its full-year revenue target to 424 billion yen.

The MLCC division is the main growth driver, with the full-year revenue target revised upward from 282 billion yen to 316.5 billion yen, an increase of approximately 12.23%, significantly higher than the overall business adjustment.

Besides Taiyo Yuden, Murata has also increased its capital expenditure plans. As the world's largest MLCC supplier, Murata has a strong advantage in AI servers and high-end computing equipment, and its expansion is seen as an important signal of industry recovery.

Industry insiders point out that the global MLCC market is currently dominated by manufacturers from Japan, South Korea, Taiwan, and mainland China. Murata, Samsung Electro-Mechanics, and Taiyo Yuden have long held a dominant position in the high-end market, especially in high-capacity, high-reliability MLCCs, where they possess technological advantages.

In the past, Japanese and South Korean manufacturers have maintained a cautious attitude towards capacity expansion, mainly because the MLCC industry has undergone cyclical adjustments, and manufacturers are concerned that over-investment will lead to a supply-demand imbalance. However, the demand changes brought about by the current AI wave are different from past consumer electronics cycles.

Market growth in areas such as AI servers and cloud computing infrastructure is more certain, and the technological barriers to high-end MLCCs are higher, meaning that new capacity will not simply lead to price competition. Therefore, Japanese and South Korean manufacturers have begun to re-enter the expansion phase.

As for Samsung Electro-Mechanics, the construction progress of its new MLCC factory in Calamba, Philippines, has also accelerated significantly.

It is understood that the factory was originally planned for a longer construction period, but the construction cycle has now been shortened to approximately 15 months, with mass production expected to begin in the first quarter of 2027, about six months ahead of schedule.

The factory will primarily produce high-capacity MLCC products, focusing on meeting the demands of high-growth markets such as AI servers and automotive electronics. Due to the limited expansion speed of high-capacity MLCC production capacity, the scale of Samsung Electro-Mechanics' new plant has become a focus of market attention.

Industry insiders believe that the simultaneous increase in capital investment by Samsung Electro-Mechanics, Taiyo Yuden, and Murata reflects how AI is changing the landscape of the passive component industry. In the past, the MLCC market was mainly influenced by the cycles of consumer electronics such as mobile phones and PCs, but in the future, AI servers, automotive electronics, and high-end industrial equipment will become new drivers of industry growth.

It is worth noting that the demand for passive components from AI infrastructure is not limited to quantity growth, but more importantly, specification upgrades. With the increase in server power consumption, the complexity of voltage conversion, and the increasing requirements for power integrity from high-speed computing platforms, the value of high-end MLCCs is continuously increasing.

Therefore, this round of passive component capacity expansion is not simply a competition for production capacity, but a new round of industrial investment centered around the high-performance computing needs of the AI era. With leading Japanese and South Korean manufacturers making early moves, the global MLCC industry chain may be about to enter a new expansion cycle.

Source: Commercial Times

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