AI Server Boom Drives MLCC Inventories to Record Low, UBS Reports

Global stocks of multilayer ceramic capacitors (MLCCs), vital for electronic circuits, have reached an unprecedented low amid soaring demand from artificial intelligence infrastructure. A UBS Evidence Lab report reveals that as of August 9, distributor inventory levels for MLCCs dropped 8% compared to four weeks prior, continuing a downward trend. Despite this, the total value of distributor inventory increased by 10% during the same timeframe due to rising average unit prices. Year-on-year figures up to the end of July indicated a 13% rise in the unit price index, a 22% decrease in distributor volumes, and a 6% increase in inventory value. Analysts from UBS, led by Shingo Hirata, warned that supply-demand imbalances might initially impact AI-related sectors before affecting the broader market. Major producers like Japan's Murata Manufacturing and South Korea's Samsung Electro-Mechanics (SEMCO) experienced volume reductions of 8% and 20%, respectively, by August 9. Known as 'the rice of the electronics industry,' MLCCs are extensively used in high-performance servers, making them the latest focus for AI-driven investors, following memory chips and optical modules. Some experts anticipate this could trigger the longest demand cycle in the sector's history.