AI drives MLCC demand explosion, ceramic powder supply chain enters upcycle
Keywords: MLCC, ceramic powder, AI servers, rare earth materials, Sinocera, Fenghua Advanced, industry capacity expansion
Introduction
On June 18, MLCC concept stocks weakened early then quickly strengthened; Boqian New Material hit its daily limit, Sinocera surged nearly 14% intraday, with Lhex, CEC Port, Sidike, Haozhi Mechatronics following. The rapid capital market reaction reflects improving supply chain fundamentals. With accelerating demand from AI servers, new energy vehicles and high-end consumer electronics, MLCC is upgrading from a traditional electronic component to a key beneficiary of the new tech hardware cycle, and upstream ceramic powder materials are entering a more flexible boom channel.
Demand explosion: MLCC enters volume and price rise phase
MLCC, one of the most used passive components in electronic devices, is widely applied in phones, PCs, automotive electronics, industrial control and AI servers. The most notable change is that AI computing infrastructure construction is significantly raising MLCC per-device loading. Demand for high-capacitance, high-reliability MLCCs in servers, power management modules and high-speed communication equipment is growing rapidly, directly causing shortages of high-end specs.
According to Taiwanese media, MLCC shortages are no longer limited to AI-specific models; regular mainstream specs are also tight. Japanese and Korean leaders like Murata and Samsung Electro-Mechanics have to abandon some low-end consumer electronics orders to prioritize high-end ones. Walsin points out that 47μF and other specs are shortest, while 10uF, 22uF and X5R main models are also squeezed, with shortage possibly lasting until 2027 or even 2028. If true, industry boom may exceed the 2018 passive component shortage wave.
Supply-demand restructuring: top players launch expansion wave
Facing sustained overshoot demand, global MLCC leaders have started a new round of capacity layout. Japan's Taiyo Yuden plans to raise its annual MLCC expansion rate from 10% to 15% in its medium-term plan, adjusting further based on CSP customer demand. Samsung Electro-Mechanics announced a new factory in the Philippines, focusing on server-grade MLCC capacity; Murata also plans an additional 80 billion yen for server-grade products, with capacity utilization near 95%.
From an industry logic perspective, this expansion is not simple cyclical repair but structural upgrade around AI servers, automotive electronics and high-end industrial applications. Compared to the consumer electronics era, automotive and server-grade MLCCs have significantly higher performance requirements, process thresholds and material purity, meaning competition is no longer just about capacity but a comprehensive contest of material, process and supply chain security.
Upstream benefits: ceramic powder heads for value revaluation
In the MLCC supply chain, the first beneficiaries are upstream key material companies, not OEMs. Yttrium oxide is an important dopant for MLCC powder, and dysprosium oxide is essential for automotive and AI server-grade MLCCs. Heavy rare earth prices have been rising recently, becoming a market focus. According to data from Shengyishe, dysprosium oxide price on June 17 reached 1.415 million yuan/ton, up nearly 11% from early June.
Behind the strong rare earth prices are both supply-demand changes and policy factors. With the formal implementation of the Mineral Resources Law Implementation Regulations, the importance of strategic mineral resources like rare earths has increased; meanwhile, China's export controls on some dual-use items constrain Japanese MLCC and powder companies. In this context, Japanese manufacturers face pressure on formulated powders, while domestic companies are expected to take more supply chain transfer opportunities thanks to resource security and technology accumulation.
Domestic MLCC dielectric powder companies like Sinocera are entering a new growth window. The company says it is benefiting from rising demand from automotive electronics and AI servers, and is accelerating expansion of automotive and AI server powder capacity. For domestic material manufacturers, this means not just order increments but also unit price increases and profitability improvements from product structure upgrades.
Capital attention: high growth expectations heat up sector
In secondary market performance, the MLCC concept has become a capital focus. Oriental Fortune data shows about 30 MLCC concept stocks in A-shares with total market cap of about 1.37 trillion yuan. Since the start of the year, related stocks have generally risen, with some leading stocks doubling. Since June, Sinocera, Xiamen Tungsten, Lhex and others have led gains, showing market expectations of industry cycle reversal strengthening.
Margin fund inflows further validate this logic. This month, 16 concept stocks received net margin buying over 50 million yuan, with leaders like Sinocera, Fenghua Advanced and Three Circles Group clearly favored. Sinocera, leveraging its leading position in high-end dielectric powder, has become one of the most sought-after core targets. Fenghua Advanced has been sending positive signals on key material self-sufficiency, high-capacity new product development, and industrial control/automotive order growth, showing that domestic substitution and high-end upgrade are progressing simultaneously.
Conclusion
Overall, the MLCC supply chain is at a triple resonance stage of demand expansion, supply constraints and technology upgrade. AI server-driven high-end demand volume is pushing MLCC from simple electronic components to higher value-added structural growth; upstream ceramic powder and rare earth materials, due to technical barriers and resource attributes, are more flexible beneficiaries in this cycle. For investors, the focus should be not only on MLCC finished product manufacturers' capacity release, but also on upstream core material companies with resource advantages, technical barriers and customer certification. In this industrial upgrade, whoever completes domestic substitution and enters high-end supply chains first is more likely to share long-term growth dividends.
