MLCC
Everyone assumed the AI boom was exclusively about GPUs and large models, yet a micrometer-scale capacitor is turning the supply chain upside down.
Each AI rack consumes 440,000 high-end MLCCs, Samsung Electro-Mechanics' profit surges by over 100%, and Japanese and South Korean giants implement across-the-board price hikes of up to 30%. The industry is now in a state where "even if price increases are accepted, delivery lead times cannot be guaranteed."
As global cloud giants begin to lock in capacity on an "annual" basis, this price hike storm triggered by the "rice of the electronics industry" is intensifying.
I. Japanese and South Korean Leaders Take Turns Raising Prices, with Across-the-Board Hikes of Up to 30%
According to recent supply chain reports from South Korea's Chosun Ilbo, leading Japanese and South Korean MLCC manufacturers have officially issued written price hike notices to downstream distributors and channel partners, kicking off a large-scale price increase in the second half of the year.
Samsung Electro-Mechanics: The notice indicates that starting August 1, 2026, the shipping prices for its entire range of MLCC products will be uniformly increased by 30% from current levels. This price adjustment covers all part numbers for consumer electronics, industrial control, automotive, and AI servers, with no specifications exempted. Industry insiders revealed that Samsung Electro-Mechanics did not elaborate much on cost pressures in the notice, merely mentioning the significant pressure on current order deliveries and stating that capacity supply will be prioritized for long-term agreement customers.
Taiyo Yuden: Following closely, it distributed price adjustment letters to global distributors, confirming the implementation of new MLCC shipping prices starting September 1, 2026. The official letter explicitly stated that the recent sharp increases in raw material prices, such as barium titanate powder, nickel powder, and rare earth additives, can no longer be absorbed through internal process optimization and cost reduction, forcing the initiation of end-product price adjustments.
This back-to-back price hike by the two manufacturers is not an isolated industry move. Looking back at the first half of 2026, this round of price increases had already created a chain reaction:
Taiyo Yuden: Conducted a phased price adjustment in April, where high-capacity automotive-grade products saw increases of 10%30%, and consumer-grade specifications were raised by 6%13%;
Taiwan-based manufacturers Yageo and Walsin: Yageo initiated a price hike for all categories of capacitors on July 1. Supply chain sources reported an overall increase of about 50%; Walsin simultaneously raised the prices of consumer MLCCs by 5%~15%.
According to field visits to electronic component merchants in Huaqiangbei, Shenzhen, by the Shanghai Securities News and the National Business Daily, multiple distributors and traders reported that after multiple rounds of price adjustments by original manufacturers, the spot market quotes for conventional small-capacitance MLCCs in 0402 and 0603 packages have fluctuated severely. Popular and scarce models frequently experience "daily quote invalidation and significant price jumps within two weeks," with spot price increases for some high-capacity AI-specific specifications being particularly prominent.
II. Samsung Electro-Mechanics' Profit Doubles as AI Long-Term Agreements Lock in Capacity
The confidence behind the original manufacturers' price adjustments is directly reflected in Samsung Electro-Mechanics' recently released consolidated financial report for the second quarter of 2026.
The financial report disclosed that Samsung Electro-Mechanics' consolidated revenue in the second quarter reached 3.4572 trillion KRW (a 24.2% year-on-year increase and a 7.7% quarter-on-quarter increase); operating profit reached 440.4 billion KRW (a massive 106.7% year-on-year surge and a 57.0% quarter-on-quarter increase), with profitability significantly exceeding industry expectations. Among these, the Components Business segment generated 1.6494 trillion KRW in revenue this quarter (a substantial 29% year-on-year increase), driven primarily by the shipment volume of components for AI data center servers and automotive passive components.
Notably, the traditional procurement model in the MLCC market is rapidly shifting from "quarterly inquiries and small-batch spot purchases" to "locking in volume and price through long-term agreements of over one year":
Expansion of Long-Term Agreement Customers: Samsung Electro-Mechanics' financial report shows that as of the end of July, the number of cooperative customers under its AI MLCC Long-Term Agreements (LTA) has expanded to over 10, covering multiple global hyperscalers and leading semiconductor design companies.
Frequent Large-Scale Special Orders: In July alone, Samsung Electro-Mechanics disclosed two large-scale special long-term agreements for AI server MLCCs (450 billion KRW finalized on June 30 and 295.1 billion KRW signed on July 23, with delivery schedules locked in for the entire year of 2027). The total publicly disclosed amount for computing power MLCC long-term agreements this year has reached nearly 750 billion KRW (approximately $510 million).
In terms of hardware consumption, a single AI rack can consume up to 440,000 MLCCs, which is 8 to 10 times that of conventional general-purpose servers and over 30 times that of smartphones. More critically, high-end AI specifications require the dielectric film thickness to be controlled within 1 micrometer. The production process is extremely complex. A single production line yields only one‑tenth the output of a standard MLCC line, and yields are also comparatively low. As Japanese and South Korean leaders prioritize their limited capacity for long-term agreement customers with large volumes, it may lead to a significant contraction of externally available supply in the distribution market.
III. The Dual "Squeeze" of High Costs and Capacity Crowd‑Out
- Substantial Rise in Upstream Raw Material Costs
Taiyo Yuden placing raw material price hikes at the top of its reasons for price adjustments is not merely a corporate excuse. The continuous rise in prices of core upstream materials over the past year has exerted rigid cost pressure on overseas MLCC manufacturers:
Barium Titanate Ceramic Powder: As the core dielectric material for MLCCs (accounting for 35%~45% of costs in high-end products), the 120nm-grade high-purity ultra-fine powder required for AI is primarily monopolized by Japanese companies. Coupled with controls on rare earth additives, procurement prices have surged significantly;
Ultra-Fine Nickel Powder and Auxiliary Materials: Export restrictions on Indonesian nickel ore have pushed up global nickel prices, directly increasing the cost of internal electrodes in MLCCs. Additionally, the simultaneous rise in auxiliary materials such as release films, glass powder, and packaging resins has caused internal cost reduction efforts within companies to hit a ceiling.
- High-End Capacity Locked in by AI Long-Term Agreements
Currently, the three Japanese and South Korean giants—Murata, Samsung Electro-Mechanics, and Taiyo Yuden—dominate the global high-end MLCC market.
Given that the construction cycle for new high-end MLCC production lines is as long as 18 to 24 months, constrained by this lengthy capacity expansion cycle, manufacturers cannot quickly add effective capacity in the short term. They can only adjust internal production scheduling to compress the capacity allocation for consumer-grade and low-end industrial control products.
Industry insiders analyze that this directly leads to the lead time for high-end AI specifications being extended to 4 to 6 months. Meanwhile, the reduction in capacity allocation for mid-tier general-purpose models has created a situation where supply and demand are tightening simultaneously. Distributors frequently encounter situations where original manufacturers cannot fully schedule orders and resort to delivering in batches, and panic restocking at the channel level further amplifies the price hike effect.
IV. Japanese and South Korean Shipments Hit a Five-Year High, Spot Prices Surge Two to Three Times
According to the latest survey by TrendForce, driven by the strong pull from self-developed ASIC computing platforms such as Google's TPU and Amazon AWS Trainium, the single-month shipment volumes of Murata (140 billion units), Samsung Electro-Mechanics (98 billion units), and Taiyo Yuden (40 billion units) in June this year simultaneously hit historical highs over the past five years.
However, this massive wave of shipments has not benefited the entire electronics industry; instead, it has triggered a "capacity crowding out" effect.
To prioritize computing power orders from cloud giants, Japanese and South Korean original manufacturers are accelerating the reallocation of X5R capacity, originally used for consumer electronics, in large batches toward high-end specifications such as X6S/X7R dedicated to AI. This reallocation directly strikes the supply and demand nerve of the general market—the availability of 1 μF–22 μF consumer‑grade medium‑high capacitance MLCCs has tightened abruptly, and inventory levels for mainstream part numbers at the channel level have been rapidly pushed below the 30-day warning line.
The sudden tightening on the supply side has quickly triggered a chain reaction in the midstream market.
Although overall end-market demand for consumer electronics remains relatively mild, midstream channels have long fallen into an anxious state of scrambling for goods. Distributors have accordingly raised their shipping quotes, and some scarce spot‑market part numbers have even risen to two to three times their original prices. Meanwhile, urgent orders from small and midsize customers unable to secure priority allocation from Japanese and Korean suppliers have spilled over to manufacturers in Taiwan and mainland China, thereby driving up the follow-the-leader price hike sentiment across the entire supply chain.
This series of chain reactions has created a unique structural market condition in the current MLCC market: while end-market consumer electronics demand has not comprehensively recovered, channel spot prices have surged significantly due to AI computing power orders crowding out capacity.
Overall, Japanese and South Korean original manufacturers have fired the first shot of passive component price adjustments in the second half of the year with a 30% price hike. Under the pattern where computing power demand continues to siphon off high-end capacity, the supply and demand restructuring in the MLCC market will persist. For the hardware manufacturing industry, the cost pressures and delivery tests on the supply chain have only just begun.
#MLCC #SamsungElectroMechanics #TaiyoYuden