Summary of Key Points
On July 27th, MLCC (Multilayer Ceramic Capacitor) concept stocks saw a collective surge in price, with the leading company Fenghua High-Tech hitting the daily limit up, and many other companies following suit. The reason behind this is that Samsung Electro-Mechanics has received two large, long-term orders for MLCCs specifically used in AI servers, totaling approximately $510 million. This reflects the tight supply and demand for high-end MLCCs due to the growing demand from the AI industry. The industry is currently in an upward pricing cycle, with a shortage of high-capacity MLCCs and prices having increased by 3-5 times. Major players are expanding their production capacity, and domestic manufacturers have the potential to take on mid-to-low-end orders that were previously going overseas, indicating significant future market opportunities.
Detailed Analysis
1. Why Did MLCC Concept Stocks Suddenly Surge Collectively?
The direct trigger for this sector's surge was the news of Samsung Electro-Mechanics' orders. In the past two months, Samsung has signed two large contracts for MLCCs used in AI servers: one worth 450 billion Korean won in June and another worth 295.1 billion Korean won in July, totaling around $510 million, with supply cycles extending until 2027. Such long-term, large-scale orders are rare in the industry, indicating that downstream AI companies are eager to secure their supply. As soon as the news was released, the market reacted positively, with stocks related to MLCC companies seeing a surge in price, with Fenghua High-Tech hitting the daily limit up and other companies following.
In simple terms: The demand for AI has exploded → Samsung received large orders → The market believes MLCC companies will make substantial profits → Stock prices rose.
2. Why Are AI Servers So Dependent on MLCCs?
What are MLCCs? You can think of them as "miniature voltage regulators and storage units" in circuits that can quickly store and discharge electricity, stabilizing the current flow and preventing issues caused by voltage fluctuations. AI servers, which process massive amounts of data and require high computing power, need significantly more MLCCs than regular servers. For example, while a regular server might use a few hundred MLCCs, an AI server could use thousands or even tens of thousands, and they must be high-end versions capable of handling high voltages and frequencies.
Currently, the construction of global AI models and computing clusters is accelerating, and downstream customers (such as cloud providers and AI companies) are signing long-term contracts in advance to ensure they won't run out of supplies. This also indicates that there is a severe shortage of high-end MLCCs.
3. Industry Status: Shortage and Rising Prices
Not only are large manufacturers competing for supplies, but the market as a whole is also under pressure. Reporters from Yicai News observed that high-capacity MLCCs are in particularly short supply in Huaqiangbei, with prices having increased by 3-5 times and delivery times extending from days to weeks or even longer.
Why is this happening? On one hand, there has been a sudden surge in AI demand; on the other hand, the industry has not expanded much in recent years, leading to a sudden supply-demand gap. According to TrendForce, previously, the industry would purchase goods on a quarterly basis, but now customers are signing annual contracts to avoid shortages, indicating that the industry has entered an upward cycle of rising prices and shortages.
4. What Are the Giants Doing?
Seeing the strong demand, global MLCC giants have started expanding their production capacity:
- Murata of Japan (the world's largest manufacturer) plans to invest 250 billion yen (about 12.5 billion yuan) to expand its production of MLCCs for servers.
- Samsung Electro-Mechanics is building a factory in the Philippines to increase its production of server-grade MLCCs.
These actions further confirm that the demand for MLCCs driven by AI is a long-term trend. The market is expected to continue growing over the next few years, with the global MLCC market size projected to reach 134.1 billion yuan in 2026, representing an annual growth of 16.5%.
5. Can Domestic Manufacturers Get a Share of the Market?
There is an opportunity for domestic manufacturers! Currently, the global MLCC market is dominated by Japanese (54%), Korean, and Taiwanese companies, with Chinese mainland manufacturers accounting for only 10.2%. However, overseas giants like Murata and Samsung are shifting their focus to high-end MLCCs for AI servers, which could result in mid-to-low-end orders flowing towards domestic manufacturers.
Domestic manufacturers (such as Fenghua High-Tech and Sanhuan Group) have advantages such as lower costs, faster delivery times, and better local services. For example, it is more convenient and cost-effective for home appliance companies to purchase MLCCs from domestic suppliers. As a result,光大 Securities believes that domestic manufacturers have the potential to take on these mid-to-low-end orders and gradually increase their market share.
In Conclusion
The surge in MLCC prices is essentially due to the demand driven by the AI industry. In the short term, concept stocks have risen because of the order news; in the long term, rising prices, expanding production capacity, and the rise of domestic manufacturers are all indicative of a trend. Ordinary investors interested in this sector should first understand the product structure of the companies (whether they produce high-end MLCCs) and their production capacity (whether they can meet demand) before blindly following the market.