The booming AI server market is pushing Japanese and South Korean multilayer ceramic capacitor (MLCC) manufacturers toward higher-end products, creating new growth opportunities for Chinese MLCC companies in mid- and low-tier markets despite technology gaps.
- Japanese and Korean MLCC makers shift to high-end AI server components
- Chinese firms gain share in mid- and low-end MLCC markets
- Chinese manufacturers preparing to advance into higher-value products
What happened
The demand for multilayer ceramic capacitors (MLCCs) used in AI servers is expanding rapidly, with estimates showing an 80 percent growth in server-grade MLCC sales from 2025. Leading manufacturers from Japan and South Korea, including Murata Manufacturing and Samsung Electro-Mechanics, are responding by moving further upmarket to produce advanced capacitors that meet the complex power and reliability requirements of AI infrastructure.
As these established players focus on high-capacity, miniaturized components, they are increasing production investments and raising prices, defying the usual trend of price erosion amid competition. In contrast, Chinese MLCC producers are leveraging this shift by growing their presence in consumer-grade and less technologically demanding segments, where domestic manufacturers have already increased their supply share significantly in recent years.
Why it matters
MLCCs are critical components for a broad array of electronic devices, earning them the nickname 'rice of the electronics industry' due to their ubiquity. The shift by Japanese and Korean leaders toward high-end AI-related capacitors signals a significant market transformation that affects global supply chains and technology leadership in electronic components.
China's growing domestic MLCC industry, although currently behind in advanced technology, is capitalizing on the leaders' upmarket movement to consolidate itself in less advanced but rapidly expanding market segments. This dynamic could reshape competitive dynamics and reduce reliance on foreign suppliers for consumer electronics and mid-tier applications while offering a platform for Chinese firms to gradually penetrate higher-value markets.
What to watch next
Investors and industry watchers should track Chinese manufacturers' progress in developing advanced MLCC technologies that could enable them to move beyond the mid- and low-end market segments. Companies like Guangdong Viiyong Electronic Technology and Chaozhou Three-Circle Group have announced breakthroughs in high-capacitance and miniaturization techniques and are targeting key growth sectors including 5G, automotive electronics, and AI infrastructure.
At the same time, developments from incumbents such as Murata and Samsung Electro-Mechanics in capacity expansion and pricing strategies for server-grade MLCCs will be critical indicators of market power and technological leadership. The evolving balance between premium segment dominance and rising Chinese competitiveness will shape the industry's trajectories in the near to medium term.