MLCC Lead Times Hit 52 Weeks as AI Demand Strains Supply
TREE NEWS reports: Lead times for multilayer ceramic capacitors (MLCCs) have extended dramatically, with Samsung Electro-Mechanics now quoting 52 weeks for all product categories—low-capacity, high-capacity, and automotive-grade—as of October, up from over 30 weeks in September. Taiwan’s YAGEO is also maintaining lead times of 30 to 52 weeks and, alongside Samsung, is leading a renewed price-hike cycle. The broad-based extension signals a structural supply shortage that is unlikely to ease before new capacity comes online.
The lengthening of lead times is no longer confined to high-capacity, high-performance products; low-capacity and automotive products are also experiencing widespread delays. Other suppliers are following suit: NIC Components’ lead times for surface-mount products have widened from 28-30 weeks to 30-40 weeks, Viking’s low- and high-capacity products have stretched from over 30 weeks to over 52 weeks, and Samwha’s non-automotive products have extended from 14-16 weeks to 20-28 weeks. While two Japanese manufacturers have kept prices stable, delivery pressure continues to mount.
Price Hikes Spread, but Divergence Remains
On pricing, YAGEO and Samsung Electro-Mechanics form the dual core of the current upcycle, with Kyocera AVX, NIC, Viking, and Quantic also maintaining upward price trends. In contrast, Murata, TDK, Taiyo Yuden, and Walsin Technology have kept prices stable, while Vishay has raised prices only on select products. Meritz notes that October’s main feature is the continuation of existing price increases rather than a broad expansion of the hiking camp, making it crucial to watch whether price-stable manufacturers follow suit.
The report argues that given the long lead times faced by major manufacturers, the direction of improvement in the MLCC industry is clear, and suppliers’ pricing power continues to strengthen.
AI Demand Drives Structural Shortage
Behind the shortage is structural demand from AI servers. AI servers carry more than 10 times the number of MLCCs compared to ordinary servers, and major tech companies are ramping up AI data center investments, driving a surge in orders for high-performance MLCCs. Only a few suppliers, notably Samsung Electro-Mechanics and Murata, have the capability to supply these products. Samsung’s component division, which houses its MLCC business, operated at 91% capacity utilization in the first half of the year, near full capacity. The company is expanding its Philippine plant, but mass production is not expected until after 2027, so the supply bottleneck will persist in the near term.
Samsung Electro-Mechanics has announced MLCC-related orders worth about 2.4 trillion Korean won this year. Global customers are accelerating the signing of full-year supply contracts for next year to secure supply.
Earnings Upgrades on Price Hikes
The tight supply-demand balance is driving earnings upgrades. Samsung Electro-Mechanics reported second-quarter revenue of 3.4572 trillion won and operating profit of 440.4 billion won; consensus expects third-quarter revenue to rise to 3.8282 trillion won and operating profit to reach 645.4 billion won. Full-year operating profit is expected to exceed 2 trillion won. IBK Investment Securities says that once MLCC price increases are fully reflected, operating profit will exceed previous forecasts; next year, driven by tight supply, the price effect will be more pronounced, with operating profit projected to reach 4.4 trillion won by 2026.
Meritz believes that structural constraints on the supply side will be difficult to eliminate in the short term, and suppliers’ bargaining power in price negotiations will continue to strengthen.
Market Implications
The MLCC shortage is a classic case of demand outpacing supply, with significant implications across asset classes. For equities, companies like Samsung Electro-Mechanics and Murata are clear beneficiaries, as pricing power boosts margins. However, downstream manufacturers—particularly in consumer electronics and automotive—may face higher costs and potential production delays, squeezing margins. The AI server supply chain remains robust, but investors should watch for any demand destruction if costs rise too sharply.
In bonds, the story is less direct but still relevant. Persistent supply chain bottlenecks could contribute to inflationary pressures, keeping central banks cautious about rate cuts. However, the impact is likely localized to the tech manufacturing sector rather than broad-based inflation.
Commodities: MLCCs use materials like barium titanate and nickel; increased production could support demand for these metals, but the effect is marginal. More broadly, the shortage underscores the physical constraints of the AI boom, which could support industrial metals demand.
Currencies: The Korean won and Japanese yen could see modest support from strong export performance in electronic components, but broader macro factors will dominate.
Crypto: No direct impact, but the AI-driven demand narrative reinforces the long-term investment case for technology and infrastructure, which could indirectly benefit crypto-AI tokens.
Key Takeaways for Investors
- Beneficiaries: Samsung Electro-Mechanics, Murata, and other MLCC suppliers with pricing power. Watch for price-stable players like TDK and Taiyo Yuden to potentially raise prices, which could be a catalyst.
- Risks: Downstream manufacturers facing cost inflation; potential demand destruction if prices rise too high; capacity expansion beyond 2027 could ease the shortage.
- Monitor: Lead time trends, price hike announcements from the stable camp, and AI server demand indicators.
- Broader theme: The AI hardware supply chain remains tight, supporting the investment case for enablers like MLCCs, substrates, and advanced packaging.
