AI Craze Sparks MLCC Buying Frenzy, Downstream Customers Compete for Long-Term Contracts to Secure Production Capacity

August 10th. Driven by strong AI demand, the passive component market has seen a rebound, with Multi-Layer Ceramic Capacitors (MLCCs) facing a supply shortage. Some customers, in order to secure a stable supply, are willing to purchase from major MLCC manufacturers such as Yageo and Murata at two to three times the original price, leading to a situation where the highest bidder gets the materials, with lead times now extended to 12 to 16 months.

Yageo has stated that the demand for MLCCs is extremely high, with production line utilization continuously increasing. The utilization rate for standard products this quarter is expected to rise from around 80% to over 90%, while special products will remain at a high level, nearing full capacity. More and more AI-related customers are looking to secure capacity through long-term agreements, locking in production capacity for six months to several years in advance to mitigate supply chain risks. The company is expanding production in Kaohsiung, Suzhou, Vietnam, Mexico, and other locations to address this demand.

Industry observers point out that large MLCC manufacturers prioritize major customers and long-term partners, putting pressure on the supply available to small and medium-sized customers, who are forced to pay a premium to secure supply. Japanese manufacturers such as Murata and Taiyo Yuden have also raised their outlook, stating that demand for AI servers and data centers has exceeded expectations, driving an increase in the usage of high-capacitance products.