Micro Capacitor Technology
Semiconductor Industry
The passive component industry is undergoing a massive production line shift triggered by AI computing power.
For a long time, Multilayer Ceramic Capacitors (MLCCs) were often jokingly referred to as the "rice" of the electronics industry—hidden in the underlying hardware and software of smartphones, computers, and automobiles, with massive throughput but extremely low unit prices. The industry's prosperity often fluctuated with the inventory cycle of consumer electronics. However, since the second quarter of 2026, the value and supply-demand landscape of this "rice" have been completely rewritten by the surging demand for AI servers.
Image source: AI-generated
Taiwan's Commercial Times cited channel distributors, noting that the current MLCC shortages are no longer limited to AI applications; major specifications are all in short supply. Walsin Technology also pointed out that the most severely short specification is currently 47μF. Because high-end AI-related orders are extremely squeezing the capacity of Japanese and South Korean manufacturers, even high-capacity 10μF, 22μF, and X5R, which are heavily used in smartphones and PCs, have been seriously affected.
According to the latest MLCC industry research by TrendForce, driven by the accelerated upgrade of AI servers and the continuous volume ramp-up of self-developed ASIC chips by Cloud Service Providers (CSPs), the BB Ratio (book-to-bill ratio) of the three leading manufacturers—Murata, Samsung Electro-Mechanics, and Taiyo Yuden—reached record highs of 1.30, 1.31, and 1.25, respectively, in late June 2026. The overall MLCC market BB Ratio also rose synchronously to 1.04.
Notably, Murata's Q1 2026 financial report shows that its Orders/Backlog Ratio has reached 1.27, surpassing the peak of 1.25 at the beginning of the most severe MLCC shortage in history in 2018. This indicates that order backlog pressure is rapidly accumulating, and the risk of supply shortages continues to rise. [Related Reading]
A passive component storm, dubbed by the industry as the "longest shortage wave in history," has already begun.
01. "Rice" Becomes "Tang Monk's Flesh"
MLCC, short for Multilayer Ceramic Capacitor, is the most basic and widely used passive component in electronic devices. As advanced process chips evolve towards higher computing power and higher power consumption, chips have put forward nearly stringent requirements for the stability of microsecond-level transient current and low-loss characteristics. Around advanced packaging and high-performance chips, traditional aluminum electrolytic capacitors and tantalum capacitors, due to limitations in size and high-frequency characteristics, are beginning to be replaced on a larger scale by high-capacity, high-frequency special-specification MLCCs.
Image source: AI-generated
This shift in technological direction has directly led to a geometric increase in the number of MLCCs required per AI device. The MLCC usage per standard server is only about 2,200 to 4,000 units, while the usage for NVIDIA's new-generation NVL72 computing cabinet has reached 440,000 to 600,000 units.
More critically, design changes for next-generation AI acceleration platforms are extremely frequent during the Final Qualification stage of mass production, causing the actual usage of high-end MLCCs to significantly exceed previous market expectations.
TrendForce stated that during the validation period, replacing all aluminum electrolytic capacitors and tantalum capacitors in the BOM (Bill of Materials) with MLCCs caused the usage of 47μF 2.5V X6S 0402 to surge from 1,440 units per board to 10,544 units, an increase of up to 632%. The demand for 100μF 4V X6S 0805 on the NVIDIA Vera Rubin platform has also increased, raised from 320 units per board to 500 units. Entering the second half of 2026, heavyweight ASIC platforms such as Google TPU V8t/i, AWS Trainium4, and Meta MTIA 400/450 will successively ramp up production, and MLCC demand will enter its peak. [Related Reading]
From the perspective of the global industrial landscape, the current market can be divided into three major tiers.
Image source: AI-generated
The first tier is dominated by major Japanese and South Korean manufacturers such as Japan's Murata and Taiyo Yuden, and South Korea's Samsung Electro-Mechanics, leading the high-end market in automotive-grade and core computing power fields. The second tier mainly consists of Taiwanese manufacturers like Yageo and Walsin Technology, which have economies of scale in standard models and medium-to-high capacity products. The third tier is the supply chain cluster in mainland China, which has gradually completed market share substitution in basic consumer and industrial-grade markets in recent years and has begun to make an impact on the automotive electronics and AI server supply chains.
02. Japanese and South Korean Leaders Fully Pivot to High-End
Facing AI server orders with higher profit margins and more urgent delivery times, major global MLCC suppliers such as Japan's Murata and South Korea's Samsung Electro-Mechanics have adjusted their production weights, tilting core capacity towards high-value-added AI-related production lines.
Image source: AI-generated
Murata took the lead in mass-producing high-specification new products such as 47μF 2.5V X6S 0402 and 100μF 2.5V X6S 0603 at the end of 2025. Samsung Electro-Mechanics followed with volume ramp-up in March of the following year, and Taiyo Yuden and Kyocera also successively joined in. However, the technical threshold for such specifications is extremely high, and the yield rates of various manufacturers still face severe tests, limiting effective capacity.
Facing the impending capacity gap, top customers have launched a "battle to lock in orders" for long-term capacity.
On June 30, Samsung Electro-Mechanics officially announced securing an annual MLCC supply contract with a total value of 454 billion KRW, with the supply cycle directly locked in for the entire year of 2027. The cooperating customer is a leading North American cloud service provider. This order size accounts for about 8.7% of the company's component business revenue last year, and a single large forward order is relatively rare. Currently, the company is negotiating new supply agreements with multiple tech giants, planning to continuously expand the shipment volume of high-value-added AI and automotive-grade MLCCs.
Taiyo Yuden recently adjusted some of its standard model capacity to automotive-grade and server high-capacity lines. According to official disclosures from Taiyo Yuden, its factories in Malaysia and Japan are concentrating on expanding the production of high-withstand-voltage MLCCs for automotive use. This strategic shift has also left room for Chinese passive component manufacturers to fill the market for standard modules.
03. The Chain Butterfly Effect of Original Manufacturers' Price Hikes
Massive demand continues to squeeze existing capacity, and the supply-demand imbalance is directly transmitted to the product pricing end, with major original manufacturers successively initiating price adjustments.
Image source: AI-generated
Global leader Murata officially implemented price increases on April 1, 2026, launching comprehensive price hikes for AI server and high-end automotive-grade MLCC products. Samsung Electro-Mechanics also disclosed an upward trend in Average Selling Price (ASP) in its financial report.
According to Nikkei News, Taiyo Yuden is adjusting its pace based on actual customer movements. Its original medium-term (2026-2030 fiscal years) operational plan was to expand capacity at a rate of about 10% per year, but it has currently signaled that it may revise the expansion speed up to 15% per year to cope with the tight capacity across the board.
On July 1, Japanese passive component giant Kyocera announced that it will invest a cumulative 100 billion JPY (approximately 4.2 billion RMB) over the seven fiscal years ending in March 2031 to produce MLCCs required for AI servers. In addition to building a new production facility at its Kagoshima plant, Kyocera will also gradually add production equipment. This move aims to cope with the surge in global MLCC demand brought about by the boom in AI data center construction.
On July 3, Samsung Electro-Mechanics announced that it will invest a total of 15 trillion KRW in the Busan region from this year to 2040. This investment aims to enhance Samsung Electro-Mechanics' competitiveness in the fields of AI data center packaging substrates and MLCCs. To this end, Samsung Electro-Mechanics plans to build its Busan plant into a core base for high-performance packaging substrates, high-value MLCC production lines, and R&D centers.
Taiwanese manufacturer Yageo simultaneously announced that, starting July 1, it will raise quotes for its full series of capacitor products, covering MLCCs, aluminum electrolytic capacitors, tantalum capacitors, polymer aluminum capacitors, film capacitors, and supercapacitors. This is the largest price adjustment range by Yageo in recent years.
According to a report by Shanghai Securities News, a Yageo distributor stated that the original manufacturer's price increase for Yageo capacitor products this time is about 50%, and the price increase in the spot market will be correspondingly larger. "This time, it is the original manufacturer notifying the price increase. In fact, the spot market has been rising in price from May this year until now, and the price of high-end capacitor products has increased by nearly 10 times at most within a month. Recently, delayed supply has frequently occurred. Besides Yageo, all major MLCC brands are experiencing delayed supply."
04. Domestic Manufacturers Seize the "Spillover Dividend" from Japan and South Korea
Facing the capacity shift of major Japanese and South Korean manufacturers, Chinese local manufacturers have targeted the opportunity and accelerated the pace of investment layout.
The high-end capacitor base project in Xianghe Industrial Park by mainland veteran manufacturer Fenghua Advanced Technology was completed at the end of 2025 and the project was concluded in April 2026. After adjustment, the project plans to add a monthly production of 15.1 billion units of high-end MLCCs. The production lines of each phase have now entered the ramp-up stage, and full production is planned to be achieved by the end of 2026. The company disclosed that its current overall monthly MLCC capacity is 65 billion units. At this stage, high-end MLCCs account for 35%-40% of MLCC business revenue, and after the Xianghe base reaches full capacity, the revenue proportion of high-end products will increase to 50%. With the year-on-year increase in sales volume and unit price of main products such as MLCCs, Fenghua Advanced Technology expects its net profit attributable to shareholders of the listed company for the first half of 2026 to be 270 million RMB to 300 million RMB, a year-on-year increase of 61.84%-79.82%.
On July 9, Chaozhou Three-Circle Group was officially listed on the Main Board of the Hong Kong Stock Exchange, achieving A+H dual listing. The funds raised will be used for high-end MLCC expansion, overseas capacity layout, and automated production line upgrades. According to the prospectus, Chaozhou Three-Circle Group's current monthly MLCC capacity is 90 billion units, 70% of which are high-capacity AI/automotive-grade models, with a full-year target monthly capacity of 120 billion units. The company has achieved mass production of 1μm ultra-thin dielectric and thousand-layer stacked high-capacity MLCCs, and is supplying 0805 47μF and 1210 100μF specifications in batches to domestic intelligent computing and optical module enterprises.
Viiyong Technology, regarded as an important force in the high-end MLCC field, is launching an impact on the ChiNext board, planning to raise 1.675 billion RMB, of which 1.37 billion RMB will be invested in high-end MLCC expansion. During the reporting period from 2023 to 2025, revenues were 1.041 billion RMB, 1.512 billion RMB, and 1.845 billion RMB respectively. Net profit deducted from non-recurring gains and losses increased nearly 13 times in three years, and the compound growth rate of automotive MLCC revenue was 264.7%. In terms of capacity, the second-phase smart factory of Viiyong Technology, located in Luoding, Yunfu, with a total investment of 3 billion RMB, completed equipment installation and debugging in June. The current monthly capacity is 60 billion pieces, and after the second phase is put into operation, the monthly production will approach 80 billion pieces.
On June 24, Yunzhou Technology announced that its controlling subsidiary, Chizhou Yuzhou, plans to sign an investment promotion agreement with the Management Committee of the Wanjiang Jiangnan Emerging Industry Concentration Zone to invest in and construct a high-performance multilayer chip ceramic capacitor production project, with an estimated total investment of 1.5 billion RMB. Yunzhou Technology stated that the project aims to expand MLCC capacity to meet market demand.
Sdik also released an announcement in mid-June, planning to invest 565 million RMB to build an annual production project of 1.2 billion square meters of high-end MLCC release films, focusing on the localization of key auxiliary materials used for ceramic slurry molding and peeling in the manufacturing process.
Hongyuan Electronic Technology has laid out two MLCC capacity bases in Chuzhou and Dongguan. Among them, the Chuzhou base put into operation an annual main capacity of 500 billion pieces at the beginning of 2023 and is currently continuing to ramp up. The Dongguan automotive-grade base entered stable mass production at the end of 2025, and will gradually ramp up throughout 2026 to release 220 billion pieces/year of high-end capacity.
05. The Material Battle in the Second Half
From the perspective of technological evolution and materials science, as the advanced process of chips advances to higher levels, the physical size and high-frequency characteristics of traditional MLCCs have begun to hit the physical red line in extreme power consumption scenarios, and the transformation of underlying materials is underway.
Silicon capacitors, as an emerging route, are being used by Japanese and South Korean giants such as Samsung Electro-Mechanics as a trump card to enter the core supply chain of AI semiconductors. Because silicon capacitors utilize the ultra-fine process of semiconductors, they can be made thinner than traditional MLCCs and possess superior high-frequency performance, and can be directly embedded into the substrate of advanced packaging.
Samsung Electro-Mechanics' announcement in May this year of securing a 1.5 trillion KRW supply mega-order, as well as its joint venture with Sumitomo Chemical to invest 500 billion KRW to establish a glass substrate joint venture, are essentially deeply binding capacitor technology with next-generation packaging carriers, attempting to provide more integrated system-level solutions for high-performance chips.
For Chinese local manufacturers, this evolution in materials and packaging forms is both a challenge and a topic that must be faced.
The contraction of major Japanese and South Korean manufacturers towards silicon capacitors, glass substrates, and advanced process packaging has indeed yielded a massive, huge-usage conventional high-capacity MLCC market in the short term. Through production line construction and process iteration in recent years, local manufacturers have already possessed the ability of large-scale substitution in the fields of consumer electronics, industrial control, and some new energy vehicles (NEVs).
However, from a longer-term market prospect, local manufacturers cannot just stay in the comfort zone of substituting conventional capacity. They should achieve fundamental breakthroughs in key materials such as ultra-fine powders, ultra-thin film high-capacity manufacturing processes, and release films, so as to truly cut into the core supply chain of high-end computing power.
Global Semiconductor Observer