Shares in Chinese MLCC makers rise as AI lifts sales and profits

Shares of China's leading multilayer ceramic capacitor (MLCC) manufacturers soared on Friday, driven by a surge in first-half sales and profits fueled by robust demand in the artificial intelligence sector. Leading the charge were Shenzhen-listed Chaozhou Three-Circle Company (CCTC) and Guangdong Fenghua Advanced Technology, with their shares climbing nearly 1% and 3%, respectively, in early trading. CCTC's Hong Kong shares jumped over 4%.

The impressive gains followed strong earnings reports released on Thursday. CCTC's revenue jumped 55% to 6.4 billion yuan (USD 952.3 million), while its net profit surged 56% to 1.9 billion yuan. Domestic rival Guangdong Fenghua reported a 74% year-over-year increase in net profit to 290.3 million yuan, with sales rising 26% to 3.5 billion yuan.

CCTC credited the sales uptick to improving market sentiment and a recovery in MLCC prices. The company plans to focus on high-end MLCCs for server and automotive applications during the second half of 2026, aiming to breakthrough in ultra-high-capacitance, large-format products.

Guangdong Fenghua also emphasized its shift towards premium offerings, noting progress in developing and scaling up production of high-growth products centered around AI computing and automotive electronics. This marks a shift from the company's previous practice of only adjusting prices for distributors.

Analysts say the MLCC industry is in the midst of an upcycle, thanks to the rapid expansion of power-intensive data centers supporting AI's growing computing needs. However, high-end MLCCs for AI servers and data centers remain dominated by Japanese Murata Manufacturing and South Korean Samsung Electro-Mechanics (SEM), both of which are operating near capacity.

SEM recently raised fourth-quarter prices for standard MLCCs used in consumer electronics by 25-30%, aiming to free up capacity for higher-end products. AI-server-grade MLCCs are expected to see a 10-20% price increase.

SEM recently focused on supplying MLCCs for AI applications, reporting a 24% year-on-year revenue increase to 3.5 trillion won (USD 2.5 billion) and a 143% jump in net income to 315.7 billion won in July. Murata also boosted its full-year operating profit forecast by 13% to a record 430 billion yen (USD 2.7 billion) for the financial year ending March 2027, buoyed by demand for AI servers. The June quarter saw a 21% revenue increase to 502.3 billion yen and a 64% jump in net profit to 81.4 billion yen.