SEOUL, September 18 — The artificial intelligence boom is squeezing supplies of the tiny components that regulate current in almost every electronic device, and Samsung Electro-Mechanics is now raising prices as customers scramble to lock in long-term contracts. The components in question are multilayer ceramic capacitors, or MLCCs. AI servers need them in large numbers, and they need higher-performance units capable of operating reliably under demanding conditions.
That demand is pulling production away from the mainstream parts used across consumer electronics, creating an unusual imbalance: MLCC prices are rising even as demand for smartphones, PCs and other traditional electronics remains sluggish.
Murata’s portfolio review
Murata Manufacturing, the world’s largest MLCC producer, has notified customers that it will discontinue selected part numbers across nine product series, industry sources said Thursday. The affected products include general-purpose MLCCs used in consumer electronics and industrial equipment, as well as some automotive components. Customers can place final orders until March 2028, with shipments ending a year later.
The Japanese company has described the decision as part of a portfolio review intended to free capacity for other products. It has not said that capacity will be redirected specifically to AI servers, though industry officials see the move as part of a broader shift toward higher-margin AI components.
“Murata and Samsung Electro-Mechanics are ultimately doing the same thing — making the products that generate better returns,” said an industry source familiar with Samsung Electro-Mechanics’ operations. “It is similar to Samsung Electronics and SK hynix prioritizing high-bandwidth memory. AI servers are where demand is strongest, so suppliers want to put more capacity there.”
A structural mismatch
Market researcher TrendForce said Japanese and Korean manufacturers have been reallocating capacity from consumer-grade X5R MLCCs to higher-end X6S and X7R products used in AI applications. The shift has pushed orders above suppliers’ capacity to fill them. In June, book-to-bill ratios reached 1.30 at Murata, 1.31 at Samsung Electro-Mechanics and 1.25 at Taiyo Yuden — their highest levels since the COVID-19 pandemic.
A ratio above 1 indicates that new orders are outpacing shipments. TrendForce described the market as a structural mismatch: demand for conventional electronics remains weak, but supplies of mainstream MLCCs are shrinking because top manufacturers are devoting more production lines to AI-related components.
“When leading makers move toward high-value products, output of general-purpose MLCCs inevitably falls,” another industry source said. “Those components are still needed in almost every electronic device, so lower supply leads to higher prices.” TrendForce expects fourth-quarter prices for consumer-grade X5R products supplied to original equipment and design manufacturers to rise by an average of 25 percent to 30 percent. Prices for premium X6S products used in AI servers are projected to climb 10 percent to 20 percent.
Buyers change their habits
The tighter market is also changing purchasing behavior. “Customers are now coming to us asking for MLCCs,” the source familiar with Samsung Electro-Mechanics said. “Previously, they bought what they needed when they needed it.
Now they are signing long-term agreements to guarantee annual supply.” Prices are gradually increasing as customers compete to secure volume, the source added. Murata’s product cuts, however, are unlikely to translate directly into additional orders for Samsung Electro-Mechanics because the discontinued parts are not among the product lines the Korean company is seeking to expand.
“The immediate benefit is limited,” the source said. “But when the world’s largest supplier makes this kind of move, it shows how much AI is reshaping the MLCC market.” For Samsung Electro-Mechanics, the larger opportunity lies in premium AI-server products. Earlier this month, the company signed a 1.07 trillion won ($774 million) contract to supply MLCCs for AI servers to a global customer throughout 2027 — its largest MLCC deal to date.
The company now has long-term supply agreements with more than 10 global customers. Watch for fourth-quarter pricing to confirm whether TrendForce’s projections hold, and for whether other manufacturers follow Murata in pruning their general-purpose catalogues.
For now, the direction of the market is set by AI servers, and the mainstream parts that fill everyday gadgets are the ones being squeezed.
