Requests from client companies for long-term contracts are reportedly increasing for multilayer ceramic capacitors (MLCCs) produced by Samsung Electro-Mechanics. With demand surging, centered on artificial intelligence (AI) servers, clients prefer annual contracts over the previous quarterly ones to secure stable supply. There is an outlook that Samsung Electro-Mechanics will show a steady performance trend as it secures medium- to long-term supply volumes.
MLCCs are essential components that stabilize current in electronic products and remove signal noise, and are called the "rice of the electronics industry." They are ultra-small components made by stacking ceramic dielectrics and electrodes in layers. They are used in nearly all electronic devices, including smartphones, automobiles and PCs, serving as a "dam" that stores electricity and supplies it when needed. The more layers are stacked, the larger the capacity, allowing more electricity to be stored.
According to the industry on the 23rd, annual contract requests are reportedly increasing for Samsung Electro-Mechanics' AI server MLCCs. As the AI industry grows, AI server production is also surging, and with a shortage of MLCCs—the essential components—expected among server corporations, they are favoring long-term contracts.
Currently, the places capable of mass-producing MLCCs for AI servers are Japan's Murata and Samsung Electro-Mechanics. The production line utilization rates for AI server MLCCs at the two corporations are nearing their maximum, leaving supply unable to keep up with demand.
AI servers consume a large amount of power, so they reportedly require more than triple the number of MLCCs per unit. High-value-added, higher-priced MLCCs are used. In the case of Nvidia's Blackwell servers, MLCC consumption is understood to increase by nearly 10 times compared with the previous generation.
An official in the electronic components industry said, "With client companies' inventory levels not large and with few corporations capable of supplying server MLCCs, there is a growing tendency to secure medium- to long-term volumes preemptively."
MLCCs used in IT devices such as smartphones are supplied to match new product launches, so the types of MLCCs installed vary by product, and client companies have received MLCCs through short-term contracts. However, for servers, because new AI Semiconductor products for servers are launched on an annual basis, stable supply volume is important.
With growing demand for MLCCs, the main business item of Samsung Electro-Mechanics, analysts say earnings growth will steepen. Lee Chang-min, a KB Securities researcher, said, "Despite the fourth quarter of last year being an off-season, operating profit is expected to have nearly doubled year over year to 230.6 billion won. This reflects increased supply of high-value-added components for AI servers," adding, "MLCCs and others are expected to enjoy a supercycle from this year through next year thanks to AI."