Requests from client companies for long-term contracts for multilayer ceramic capacitors (MLCCs) produced by Samsung Electro-Mechanics are reportedly increasing. As demand surges centered on artificial intelligence (AI) servers, clients prefer annual contracts over the previous quarterly contracts to secure stable volumes. There is an outlook that Samsung Electro-Mechanics will show steady performance as it secures mid- to long-term supply volumes.
MLCCs, essential components that stabilize electric current in electronic products and remove signal noise, are called the "rice of the electronics industry." They are ultra-small components made by stacking ceramic dielectrics and electrodes in layers. They go into almost all electronic devices, including smartphones, automobiles, and PCs, serving as a "dam" that stores electricity and supplies it when needed, and the more layers are stacked, the greater the capacity and the more electricity can be stored.
According to the industry on the 23rd, annual contract requests are reportedly increasing for Samsung Electro-Mechanics' MLCCs for AI servers. As the AI industry grows, production of AI servers is also surging, and corporations centered on server makers prefer long-term contracts as a supply crunch for MLCCs, an essential component, is anticipated.
Currently, the places capable of mass-producing MLCCs for AI servers are Japan's Murata and Samsung Electro-Mechanics. Supply is failing to keep up with demand to the point that the MLCC production line utilization rates for AI servers at the two corporations have reached their maximum.
In the case of AI servers, power consumption is high, so the number of MLCCs required per unit is known to be more than three times greater. High value-added MLCCs with higher unit prices are used. For Nvidia 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 not many corporations able to supply MLCCs for servers, there is a growing tendency to preemptively secure mid- to long-term volumes."
MLCCs that go into IT devices such as smartphones are supplied to match new product launches, so the types of MLCCs installed differ by product, and client companies have received supply under short-term contracts. However, for servers, new AI Semiconductor chips for servers are released on an annual basis, making stable volume supply important.
As demand increases for MLCCs, Samsung Electro-Mechanics' main business item, analysts say earnings growth will steepen. Lee Chang-min, an analyst at KB Securities, said, "Despite the fourth quarter of last year being a slow season, operating profit is expected to come in at 230.6 billion won, up about 100% from a year earlier, due to increased supply of high value-added components for AI servers," adding, "Thanks to AI tailwinds, MLCCs and other products are expected to enjoy a supercycle from this year through next year."