Demand from AI servers and new energy vehicles is driving the multi-layer ceramic capacitor (MLCC) industry into a new cyclical upswing. Major MLCC manufacturers have recently raised prices for high-end, high-capacity models used in AI servers and automotive applications, boosting market expectations for the sector's outlook.
A report from China Galaxy Securities indicates that MLCC usage in AI servers has surged, particularly for high-capacity units. Ultra-high-capacity MLCCs are now in short supply with extended lead times. While leading firms are gradually expanding production, capacity increases are expected to take over a year to materialize. The tight supply-demand gap for ultra-high-capacity MLCCs is unlikely to ease soon, suggesting continued benefits for the MLCC supply chain.
This strong industry momentum is translating into improved corporate earnings. Fenghua Advanced Technology (Fenghua GaoKe) expects net profit attributable to shareholders to reach between 270 million yuan and 300 million yuan in the first half of the year, representing a year-on-year increase of 61.84% to 79.82%. Chaozhou Three-Circle (Group) Co., Ltd. (Sanhuan Group) forecasts net profit attributable to shareholders of 1.794 billion yuan to 2.041 billion yuan for the same period, a rise of 45% to 65% year-on-year.
A representative from Three-Circle Group noted that its MLCC products have benefited from higher customer recognition and improved industry conditions. Prices for some specifications have returned to reasonable levels, leading to substantial growth in both sales volume and revenue. A Fenghua GaoKe representative stated that the company made significant progress in technology and market expansion during the first quarter of this year. On the technology front, Fenghua GaoKe achieved breakthroughs in key material self-sufficiency, specifically with high-reliability ceramic powder for automotive MLCCs, screen printing paste, and copper electrode paste for automotive electronics. Three MLCC products completed customer coding certification and began batch delivery, while seven new high-capacity products are under development to serve emerging market sectors. In terms of market expansion, the company saw steady order growth in its industrial control and automotive segments, with sales volumes rising for high-value special products, high-capacity products, alloy resistors, and thin-film resistors.
"The number of GPUs per AI server is increasing, making power supply systems more complex and placing higher demands on MLCC capacity, voltage resistance, and reliability," said Wu Zewei, a special researcher at Sushang Bank. "Meanwhile, the electrification and intelligence trends in new energy vehicles are driving higher usage of automotive-grade MLCCs. Under this dual demand, the high-end MLCC market is expected to maintain strong momentum."
Zhang Xiaorong, president of the Deep Institute of Science and Technology, commented: "The technical barriers for high-capacity MLCCs are high, and production expansion cycles are long, so new capacity can't be added quickly in the short term. However, demand from AI servers and automotive electronics is growing rapidly, so the tight supply-demand balance will persist. Companies with strong R&D capabilities for high-end products, large-scale manufacturing capacity, and certification advantages with top-tier customers are well-positioned to increase their market share and profitability."
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