AI demand is intensifying, creating a supply squeeze in the global passive component market. Multilayer ceramic capacitors (MLCCs) are witnessing a price-driven scramble, with some clients paying two to three times the normal price to secure stock, highlighting a widening supply-demand gap.
Leading passive component maker Yageo stated that MLCC demand is "truly very strong," with market heat rising across capacity utilization, new customer projects, and long-term contract needs. Yageo particularly noted that more AI-related clients are proactively seeking to lock in capacity supply for the next six months to several years to avoid future supply risks.
This supply-demand dynamic is also boosting capital markets. In afternoon trading on the A-share market, MLCC concept stocks rebounded, with shares of Yunchang Technology and Longxin Intelligent gaining over 10%, and Fenghua Advanced Technology approaching a limit-up. Other stocks like Guocai Ceramics, Boqian New Materials, and Jiemei Technology also rose, reflecting growing expectations for the supply chain.
Lead times extend to 16 months, small and medium clients forced to pay premiums
According to reports, major MLCC manufacturers are currently running at full capacity, with lead times extended to 12 to 16 months. Large manufacturers are prioritizing production for their biggest clients and long-term partners, while high-end applications like AI servers and data centers are ramping up quickly, further squeezing the supply available to smaller clients.
Industry analysis suggests that once inventories of small and medium clients become insufficient, fears of material shortages impacting final shipments will force them to pay higher prices for limited supply. Some urgent orders are even commanding prices two to three times the original, with a "highest bidder wins" atmosphere for materials spreading across the market.
Yageo had previously signaled a strengthening supply-demand balance for passive components at its earnings conference. The company expects utilization rates for standard products to rise from around 80% in the second quarter to over 90% this quarter, while specialty products will maintain a high rate above 90%. Overall capacity utilization is moving toward full capacity.
To meet customer demand, Yageo is increasing capacity at its production bases in Kaohsiung, Suzhou, Vietnam, and Mexico. As related equipment arrives, new capacity will be released on a quarterly basis.
Japanese giants also see a bright outlook, Murata and Taiyo Yuden confirm demand exceeds expectations
The strong demand is not exclusive to Yageo; major global MLCC players are also signaling positive trends. Murata Manufacturing, the world's largest MLCC maker, recently significantly raised its annual profit forecast, citing the data center construction boom as a key driver.
Taiyo Yuden, the world's third-largest MLCC manufacturer, stated that AI server demand has surpassed initial expectations. The market is rapidly shifting toward higher-capacitance products, which is increasing the MLCC usage per device and providing further support for the overall market outlook.
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