China’s MLCC market splits in 2 as AI server demand outpaces consumer electronics

In China's bustling hardware center of Shenzhen, the speculative frenzy surrounding consumer multilayer ceramic capacitors (MLCCs) has transitioned into a significant price correction, while MLCC prices for artificial intelligence server components remain notably high. According to Wang Jun, an MLCC distributor in Huaqiangbei, consumer-grade MLCC prices have plummeted by a staggering two-thirds from their peak two months ago.

However, despite this decline, the prices have remained elevated, driven more by speculation than actual demand, a sentiment echoed by Wang, the manager at Tongxin Chuanghui Technology, which trades imported MLCCs from global leaders like Murata Manufacturing and Samsung Electro-Mechanics (Semco).

The consumer MLCC segment has recently experienced a modest rebound following reports that Murata might discontinue production of some consumer MLCC models. Wang explained that prices for mainstream products are likely to stabilize. He noted that the consumer MLCC market seems to be reaching saturation, and domestic companies are ramping up production to meet the demand.

In contrast, the demand for high-capacitance MLCCs used in AI servers remains robust in Huaqiangbei. A distributor revealed that prices for these server-grade MLCCs have surged up to five times over the past year. Another key point highlighted by a vendor in the trade is that the supply of server MLCCs is critically tight.

A CCTV report cited earlier this month further emphasized the situation, with vendors stating that some high-demand models have soared to as much as ten times their original prices since the rally began in June. The surge in prices for consumer-grade MLCCs proved to be short-lived due to weak demand for consumer electronics. As leading suppliers scale back lower-margin mature parts, Chinese manufacturers are well positioned to expand their sales in these areas.

Kazunori Ito, a director at Morningstar, noted that as leading suppliers reduce focus on lower-margin parts, Chinese manufacturers have an opportunity to expand their sales in these areas.

Global leaders are increasingly shifting their capacity away from mature parts to meet the demand for AI-related applications. Murata, the world's largest MLCC maker, is expected to halt production of selected models across nine product series for general-purpose and automotive applications. As major Japanese and Korean suppliers continue to shift capacity towards the highest-end products, Chinese manufacturers are expected to gain more customer qualifications in the mid-tier segment due to their cost advantages and local material sourcing, as discussed by Kazunori Ito.