With demand for artificial intelligence (AI) servers and automotive electronics surging, analysts in the securities industry say the multilayer ceramic capacitor (MLCC) market is entering the beginning of a "supercycle." MLCCs are essential components that stabilize current and remove noise in electronic devices, with hundreds used in a single smartphone and tens of thousands in an AI server. Samsung Electro-Mechanics, the world's No. 2 MLCC maker by market share, is expected to benefit structurally.
According to related industries on the 18th, while demand for MLCCs for AI servers and automotive electronics is rapidly increasing, demand for general-purpose IT such as smartphones and PCs is also recovering, reducing supply capacity. In particular, as power consumption and processing performance of AI servers rise, large volumes of high-spec MLCCs are needed, which is extending lead times for general-purpose MLCCs as well.
MLCC productivity varies greatly depending on design factors such as the number of layers and area. When demand concentrates on a specific spec, it is structurally difficult to switch lines to other products.
Industry watchers see this trend as similar to the process in which the D-RAM pricing structure changed amid the recent surge in demand for high bandwidth memory (HBM). To expand HBM production, chipmakers reallocated advanced process and packaging lines around HBM, and as a result, general-purpose D-RAM supply decreased and prices soared; likewise, production of high value-added MLCCs for AI servers is encroaching on general-purpose MLCC lines, causing supply contraction.
The shift in Samsung Electro-Mechanics' business mix also supports the market's reorganization trend. The share of MLCC sales for AI servers at Samsung Electro-Mechanics expanded from 3% in 2023 to 9% in 2024, and is expected to exceed 10% in 2025. This indicates that production lines are moving toward high value-added specs and provides grounds to justify normalization of general-purpose MLCC pricing and reduced discounts. As of the first half of this year, Samsung Electro-Mechanics holds a 25% share of the MLCC market, ranking No. 2 globally.
Murata Manufacturing, the No. 1 corporation with about 40% market share, also raised its revenue and operating profit forecasts for this year, reflecting a recovery in demand for smartphones, communications, and computers. As distribution inventories have fallen to levels based on real demand, the view that the MLCC market's recovery is a "structural change," not a "short-term rebound," is gaining traction.
The industry sees a high likelihood that starting next year, the MLCC pricing system will shift to selective hikes centered on high-spec products and reduced discounts for general-purpose products. This is the same structure as the "supply reallocation cycle" observed in the D-RAM market, and the consensus is that the densification of AI servers and demand for automotive electronics will act as a buffer absorbing short-term adjustments, allowing upward price pressure to persist over the long term.
This market shift is being reflected in Samsung Electro-Mechanics' earnings. KB Securities expects Samsung Electro-Mechanics' fourth-quarter revenue and operating profit this year to rise 13% and 89%, respectively, from a year earlier, and maintained a "buy" rating with a target price of 300,000 won. Despite the off-season, it is expected to post peak-season-level results. Lee Chang-min, an analyst at KB Securities, said, "The growing share of components for AI servers and automotive electronics is reducing the seasonality of IT components, so even with clients' inventory adjustments, the decline in sales will be limited."