AI boom drives demand for tiny capacitors, investors take notice

The surge in artificial intelligence is driving an increased demand for multilayer ceramic capacitors (MLCCs), small electronic components essential for smartphones, electric vehicles, and advanced servers. A report from TrendForce, a market research firm based in Taipei, published on Monday, highlights that the AI hardware expansion is straining production capabilities as manufacturers focus on high-end supplies for data centers, leading to price hikes from suppliers. A research note from China Securities last week indicated that an AI server, which is heavily equipped with graphics processing units, can use up to 10 times more power than a conventional server and may need as many as 28,000 MLCCs—13 times more than a typical configuration. The industry appears set for significant growth, reminiscent of the 'growth miracle' experienced in the optical module sector. Dominating the global MLCC market are Japanese and South Korean companies, particularly Murata Manufacturing and Samsung Electro-Mechanics (SEMCO), which have a firm grip on the high-end capacitors utilized in AI servers.