JPMorgan: AI Server Demand Heating Up, Asia's MLCC Industry May Welcome a New Boom Cycle

June 15 – JPMorgan Chase’s latest research report projects the global multi-layer ceramic capacitor (MLCC) market will see a sharp tightening of supply-demand dynamics in the coming years, potentially tipping into a shortage phase between 2027 and 2028. MLCCs, foundational components used across electronic devices, were long tied to demand from smartphones, PCs, and consumer electronics—but the report identifies transformative new growth drivers: AI servers and automotive electronics. AI servers are now the primary incremental demand source, per JPMorgan, as they require far higher power stability and component specs than consumer gear, calling for more high-capacity, high-performance MLCCs. The forecast calls for rapid global MLCC industry revenue growth from 2025 through 2028, fueled by product price hikes and shifting demand patterns. The market is set to swing from a roughly 10% oversupply in 2025 to a 5% shortage in 2027, then widen to a 6% shortage by 2028. On the supply side, JPMorgan flags key constraints: while manufacturers are expanding production capacity, high-spec MLCCs (used in AI servers and automotive parts) have larger sizes, more stringent technical requirements, and lower production yields. Nominal capacity growth does not always translate to immediate effective supply, as some AI server-grade MLCC lines yield only a fraction of standard product lines, the report notes. Automotive electronics act as another steady demand pillar. The rise of electric vehicles (EVs), hybrid models, and advanced smart features is lifting per-vehicle MLCC usage. By 2030, high-growth segments including automotive, servers, and humanoid systems will account for over one-third of total MLCC demand, per projections. For investors, JPMorgan holds an overall positive outlook on major Asian MLCC makers—but favors Japanese and Taiwanese firms over Korean peers. Japanese players like Murata, Taiyo Yuden, and TDK, plus Taiwan’s Yageo, stand out for stronger valuations and profit elasticity. South Korea’s Samsung Electro-Mechanics, while benefiting from industry tailwinds, has already seen sharp stock gains, eroding its valuation advantage, the report says. The report also cautions the market has already priced in much of this optimism. MLCC-related stocks have rallied significantly this year, so future momentum will depend on three factors: whether AI server demand continues to outperform forecasts, limits to manufacturers’ production expansion, and whether high-end MLCC prices can stay elevated. Key indicators for investors to watch include industry pricing, inventory shifts, and manufacturers’ updates on production yield capacity.