China Galaxy Securities Co., Ltd. has released a research report stating that the supply of domestically produced MLCC dielectric powder has long been characterized by an oversupply in the low-end segment and reliance on imports for high-end products. To meet the demand for high-end powder, mid-to-low-end production capacity is being utilized, and with the recovery of the consumer electronics market, the overall situation is expected to present a "high-end shortage, low-end tight balance" scenario. Against the backdrop of AI-driven demand, global MLCC volumes and prices are rising, and the firm is optimistic about Chinese MLCC powder supply chain companies seizing this historical opportunity to grow stronger.
Key Points from the Report
Since January 2026, the Ministry of Commerce has successively issued the "Announcement on Strengthening Export Controls on Dual-Use Items to Japan" and announced that MLCC and powder manufacturers like TDK would be placed on an export control watchlist. In March 2026, Nvidia commenced mass production of its Rubin platform. Starting in April 2026, Murata, Samsung Electro-Mechanics, and Taiyo Yuden announced price increases for MLCCs.
Historical Supply Dynamics of Domestic MLCC Powder
MLCC, or Multi-layer Ceramic Capacitor, is the most widely used passive component in electronics, often called the "rice of the electronics industry." It functions for voltage stabilization, filtering, energy storage, and noise reduction, with applications in motherboards, power supplies, mobile phones, new energy vehicles, and AI servers. Ceramic dielectric powder is the highest-value component within it. Due to factors like purity, particle size, stability, crystal structure and doping technology, manufacturing processes, patent restrictions, and long verification cycles, domestic MLCC powder has long faced a situation of "severe internal competition in the low-end and dependence on imports for the high-end." The global high-end MLCC powder market is monopolized by Japanese companies like Sakai Chemical, American Ferro, and Murata, with downstream MLCC customers including Murata, Samsung, and TDK.
Shift from Consumer Electronics to AI and Automotive Grades
As the primary destination for MLCC powder, the consumer electronics sector has declined for three consecutive years, leading to increasingly weak demand for mid-to-low-end powder, along with persistently low inventory and utilization rates. Since 2026, MLCC powder has seen a surge in demand driven by AI computing power and new energy vehicles. According to Murata, AI server MLCC demand is expected to grow at an average annual rate of +30% from 2025 to 2030, increasing 3.3 times by 2030 compared to 2025. On one hand, AI servers require more MLCCs; on the other, requirements for high capacitance, high voltage, high temperature, and small size place higher demands on the quality of high-end powder. To meet the supply of high-end powder, mid-to-low-end capacity is being occupied. With the recovery of the consumer electronics market, the overall situation is expected to be one of "high-end shortage, low-end tight balance."
Historical Opportunity for the Domestic MLCC Powder Supply Chain
Over the past three years, due to weak downstream demand, expansion by domestic MLCC powder manufacturers has slowed, while Japanese integrated MLCC manufacturers have shown a trend toward outsourcing powder and maintain low inventory. On January 6, 2026, the "Announcement on Strengthening Export Controls on Dual-Use Items to Japan" was issued; on February 25, 2026, Japanese MLCC and powder manufacturers like TDK and Mitsubishi Materials were placed on a watchlist, with near-zero approvals for heavy rare earth exports (such as yttrium oxide, dysprosium oxide, terbium oxide) to Japan. Yttrium oxide is a primary essential doping material for MLCC powder, while dysprosium and terbium are necessary additives for automotive-grade and AI high-voltage-grade MLCCs. Japanese MLCC powder factories face supply disruptions and insufficient inventory. Chinese MLCC powder manufacturers are extending their cost advantages into supply security advantages, with their scarcity becoming even more prominent under this historical AI-driven opportunity.
Companies in Focus
1) Guoci Materials: The company is a globally leading producer of MLCC dielectric powder. Leveraging years of technological accumulation, it has achieved comprehensive coverage of various base and formula powders, with customers covering domestic and international leading companies such as Samsung Electro-Mechanics, Yageo, and Fenghua Advanced Technology. In recent years, it has focused on MLCC powder for AI servers and automotive applications, advancing the expansion of high-end powder production. Simultaneously, its MLCC electronic paste business is progressing smoothly, with sales growing rapidly. It has successfully developed various specifications of high-capacitance paste, automotive-grade specialized paste, and RF specialized paste in collaboration with customers.
2) Wanwei High-Tech: The company has successfully developed several types of PVB resin for MLCCs. Its products have passed testing and evaluation by downstream customers, with technical indicators reaching the level of foreign competitors. PVB serves as a temporary binder carrier for MLCC green bodies. Since barium titanate ultrafine powder itself lacks molding capability, PVB dissolves in organic solvent to coat barium titanate particles, forming a continuous polymer network film after the solvent dries. Representative manufacturers of MLCC PVB resin include Japan's Sekisui, Japan's Kuraray, and Wanwei High-Tech. Furthermore, Wanwei High-Tech is undertaking the Anhui Province Key R&D Program project "Research and Development of Polyvinyl Butyral (PVB) Resin for Multilayer Ceramic Capacitors (MLCC)," with related technology R&D and industrialization work continuously advancing.
Risk Factors
Risks include material production expansion and market promotion falling short of expectations, as well as uncertainties in technological advancement.
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