Taiyo Yuden, Japan's No. 3 maker of multilayer ceramic capacitors (MLCC), has asked customers to raise prices further for shipments in September. It also said that even with price adjustments, it may be difficult to supply on schedule.
The move comes as production of high-capacity MLCCs for artificial intelligence (AI) servers increases, reducing capacity to supply general-purpose products. The industry sees Taiyo Yuden's action potentially influencing the MLCC pricing policies of Samsung Electro-Mechanics and Murata. Murata holds about 40% of the overall MLCC market. By Samsung Electro-Mechanics' own estimate, last year's market share was about 23%.
◇ Additional hike for September shipments… reversal a month after the earlier stance
According to a notice from Taiyo Yuden dated on the 23rd and obtained by ChosunBiz on the 29th, the company asked customers to adjust MLCC prices starting with shipments on Sept. 1. It cited higher prices for raw and auxiliary materials as reasons for the increase. In the notice, Taiyo Yuden said, "Raw material prices have surged, and while we have done our utmost to reduce expense, it has reached a level where it is difficult to absorb all the cost increases through our own efforts."
Taiyo Yuden also asked customers for a price adjustment last month. Even so, with the burden of costs not fully absorbed, it told clients that a further increase is necessary. The company said, "Even if this price adjustment request is accepted, we cannot promise supply in line with delivery deadlines," adding, "We will adjust as much as possible within the available range."
Taiyo Yuden's price adjustments have been repeated this year. In April, the company raised prices for consumer products and some automotive MLCCs by 6% to 13% for the China distribution network. Starting May 1, it also increased prices for some MLCCs, inductors, and ferrite beads supplied to clients.
This additional hike request is also a reversal from the stance a little over a month ago that it had "no plans to raise prices due to supply-demand shortages." President Katsuya Sase of Taiyo Yuden said in an interview with the Nikkei last month, "At this stage, we do not plan to raise prices on the grounds that supply and demand are tight."
An industry official said, "It is true that the surge in prices for ceramic materials, including zirconium oxide, has increased MLCC makers' cost burden," but added, "What likely played a bigger role in enabling Taiyo Yuden to reverse its earlier stance and pursue an additional hike is that MLCC shortages have spread across product categories."
◇ Soaring demand for AI servers… pressure on general-purpose MLCC supply
An MLCC temporarily stores and releases electricity to keep the voltage in an electronic circuit steady and removes noise, an unwanted signal inside electronic devices. They go into most electronic products, from smartphones, PCs, and home appliances to cars and industrial equipment. Recently, demand has been growing rapidly, centered on AI servers. That is because many high-capacity MLCCs are needed to supply power stably to high-performance compute devices.
According to market research firm TrendForce, Nvidia's Blackwell-based GB200 compute board being adopted in AI data centers now contains more than 6,500 MLCCs. For the next-generation Vera Rubin–based board, with supply set to ramp up in the second half of this year, higher power consumption and more complex power management circuitry are expected to increase the MLCC count to about 12,000.
The high-spec MLCC market for AI servers is led by Murata and Samsung Electro-Mechanics. The securities industry estimates market share for AI server MLCCs at Murata 45%, Samsung Electro-Mechanics 40%, and other companies 15%. Taiyo Yuden also makes products for AI servers, but the industry views it as having a lower share in the ultra-high-spec segment compared with the two companies and a relatively higher share of general-purpose products used in IT devices such as smartphones and PCs.
The industry sees Taiyo Yuden's successive price adjustments as evidence that the shortage originating in high-spec products for AI servers is spreading to the general-purpose MLCC market. As AI demand grows, Korean and Japanese companies are prioritizing capacity for higher value-added products, reducing the availability for general-purpose products and spreading shortages across MLCCs overall.
This is also reflected in order indicators. According to TrendForce, the book-to-bill ratio (BB ratio)—orders at the end of June divided by shipments—was 1.31 for Samsung Electro-Mechanics, 1.30 for Murata, and 1.25 for Taiyo Yuden. All three are at their highest levels since the COVID-19 pandemic. The industrywide BB ratio was 1.04. A BB ratio above 1 means new orders exceed actual shipments, leading to a buildup of backlogs. The higher the figure, the longer the lead times and the greater the likelihood that suppliers gain the upper hand in price negotiations.
◇ Shrinking capacity for general-purpose output… impact on Samsung Electro-Mechanics and Murata negotiations
Murata and Samsung Electro-Mechanics have not frozen MLCC prices. The average selling price (ASP) of Samsung Electro-Mechanics' MLCCs rose 0.9% last year from the previous year and climbed 8.1% in the first quarter of this year. However, the industry sees Taiyo Yuden as being more aggressive than Murata and Samsung Electro-Mechanics in raising prices for general-purpose products. The interpretation is that as the No. 1 and No. 2 players concentrate production capacity on high-spec products for AI servers, Taiyo Yuden's relative influence has grown in the general-purpose market.
Capacity to supply general-purpose MLCCs is expected to shrink further. Samsung Electro-Mechanics signed MLCC supply contracts worth 454 billion won and 295.1 billion won with global blue-chip companies in June and July, respectively. As supply of high-capacity products for AI servers tightens, customers appear to be moving to lock in long-term volumes. The securities industry estimates that, converted to a general-purpose basis, the two AI server MLCC contracts could account for about 10% of Samsung Electro-Mechanics' projected ceramic capacity in 2027. Murata is also increasing the share of MLCC production for AI, reducing the capacity that can be allocated to general-purpose products.
With No. 3 player Taiyo Yuden moving to an additional hike, Murata and Samsung Electro-Mechanics appear to be under less pressure to raise list prices in negotiations with customers. MLCC makers negotiate prices individually with customers depending on product specifications, supply volumes, and contract periods.
An industry official said, "MLCC prices are decided through customer-by-customer negotiations, making it difficult for companies to formalize whether they are raising prices," adding, "If you raise prices before competitors, you can lose customers, so Taiyo Yuden's move could become a variable in the pricing strategies of Samsung Electro-Mechanics and Murata."