The artificial intelligence (AI) rally sweeping across Asia is intensifying and spreading deeper into the supply chain. For much of the past year, the spotlight has been on chipmakers like TSMC, Samsung Electronics, and SK Hynix—key suppliers to NVIDIA. A global chip shortage has driven their stock prices to record highs. Now, investors are scrutinizing the broader AI supply ecosystem, recognizing that even the most powerful processors cannot function without lesser-known supporting components.
This growing awareness, combined with rising demand and prices, is fueling a rebound for a new group of companies. These firms fall into three main categories: multilayer ceramic capacitors (MLCCs), which regulate power within electronic systems; advanced chip substrates, which connect semiconductors to other hardware; and thermal compression bonding (TCB), a precision process that fuses all parts together.
Kieron Poon, Asian equity investment director at abrdn, offered an analogy: “Think of a printed circuit board as a dining table. The plates on the table can be thought of as substrates, and the food on the plates is the chip.”
Within this group, substrate manufacturers Unimicron Technology Corp. and Ibiden Co. have seen their shares surge approximately 770% and 530%, respectively, over the past 12 months. MLCC producers Samsung Electro-Mechanics Co. and Murata Manufacturing Co. also reached all-time highs this month. Hanmi Semiconductor Co., a leader in TCB, similarly hit a record high.
Much of this supply chain is concentrated in Asia, primarily in South Korea, Taiwan, Japan, and China. The trend is being driven by the intensity of AI infrastructure development. AI servers consume significantly more power than traditional servers, creating a ripple effect: higher power demands require more components to manage and stabilize the system.
According to Young Jae Lee, senior investment manager at Pictet Asset Management, an AI server may use 10 to 15 times more MLCCs than a standard server, and about 30 times more than a smartphone. This surge in demand is tightening supply and pushing up prices for these components.
Samsung Electro-Mechanics indicated this week that it is considering raising MLCC prices by up to 10%. Citigroup analyst Takayuki Naito also highlighted growing market expectations for price increases in components such as MLCCs, aluminum electrolytic capacitors, and packaging substrates. Naito suggested this could benefit Japanese manufacturers like Murata Manufacturing and Taiyo Yuden Co., which may adopt more aggressive pricing strategies.
Last week, J.P. Morgan analysts raised their price targets for Murata and Taiyo Yuden, noting that supply-demand conditions are likely to remain tight for an extended period. Simon Woo, head of Korea research at BofA Global Research, added that MLCC and substrate production lines are already operating at over 90% capacity. He noted, “If AI demand increases even slightly from current levels, capacity for traditional applications will shrink significantly.”
The ripple effect is spreading further across the ecosystem. Optical component manufacturers have also been drawn into the rally, as investors pay closer attention to the role these technologies play in data centers—especially with rising bandwidth demands as AI usage grows.
Abrdn’s Poon added that supply for capacitors, substrates, and TCB remains concentrated, and the customer base these companies serve is expanding rapidly. This means pricing power “definitely still lies with the suppliers.”
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