Murata Manufacturing's Advanced MLCC Investment Efficiency is Extremely High, Demand Accelerates Growth

Overview

This report summarizes comments made by Murata Manufacturing management during the analyst meeting on May 27th. The core conclusion is that the company's investment efficiency in advanced multilayer ceramic capacitors (MLCCs) is extremely high, and demand growth momentum is strong. The report believes that although the company does not raise existing product prices, due to the increasing proportion of high-end products, the average selling price (ASP) will still rise, driving significant acceleration in overall sales growth. The company plans to add ¥80bn in capital expenditure, mainly for capacity expansion of MLCCs with high added value for AI/Data Centers and edge AI devices. This return on investment is far higher than regular expansion. The report maintains an Overweight rating on Murata Manufacturing with a target price of ¥5,100.

Core views

Demand Side: AI/Data Center applications are the core driver of current MLCC growth. It is estimated that their share in the company's total MLCC sales revenue will increase significantly from 10-15% in F3/26 to 20-25% in F3/27, with related sales revenue year-over-year growth reaching as high as 85-90%. Meanwhile, the report points out that demand for small-sized, high-capacity MLCCs in AI edge devices (such as smart sensors and wearable devices) will continue to grow in the medium term, providing a new growth engine for the company. Supply & Investment: The company has been continuously expanding at a rate of 10% annually. However, to meet demand for high-end products, it plans to invest an additional ¥80bn in capital expenditure. This investment is not for general capacity but is specifically dedicated to improving the production process for advanced MLCCs. Its investment efficiency is evaluated as "extremely high," far better than regular expansion. This means unit capital expenditure can bring higher revenue growth. Profit & Pricing: The report explicitly states that Murata Manufacturing will not raise prices for existing MLCC products. However, ASP will still rise. There are two reasons: First, newly launched advanced products are priced far higher than traditional products, and their sales share continues to increase; Second, with the optimization of demand structure, downward pressure on traditional product prices weakens, and even in non-AI fields, prices tend to stabilize. Product Capability: The company possesses the ability to supply both embedded and surface-mount (mounting) MLCCs and silicon capacitors simultaneously. This gives it unique advantages in the high-growth area of GPU/TPU packaging substrates, enabling it to solve technical challenges such as connection reliability.

Analysis framework

The institution adopted an analysis framework with dual main lines of "Demand-Driven + Investment Efficiency". First, starting from downstream applications (AI/Data Center, AI Edge Devices), it cut into the explosive demand, quantifying its impact on MLCC sales volume and structure, and judging the sustainability of growth. Second, the institution did not simply equate capital expenditure with growth, but deeply analyzed the "quality" of capital expenditure—distinguishing between regular expansion (annual 10%) and targeted investment for advanced products (additional ¥80bn), and emphasizing that the latter has "extremely high investment efficiency". This indicates the institution focuses on return on capital rather than simple scale expansion, which is a more refined fundamental company analysis. Finally, the institution broke down the logic of ASP increase into two levels: "Product Structure Optimization" (High ASP product share increases) and "Price Rigidity Enhancement" (Downward pressure on traditional product prices decreases), rather than relying on a single price increase. This aligns better with the competitive characteristics of the electronic components industry and reflects a deep understanding of pricing power.

Methodology notes

• Industry Analysis FrameworkSupply-demand framework

  AI/Data Center and AI Edge Device Demand Drives MLCC Market Growth

  The report builds Murata Manufacturing's growth logic on two major demand scenarios: AI computing (data centers) and AI edge devices. By analyzing specific demands for high-capacity, miniaturized MLCCs in these areas, it derives the long-term trends of the company's product sales volume and structure. This is a typical application of a 'demand-driven' supply-demand framework.

• Company Fundamentals & Financial FrameworkFree cash flow analysis

  Investment Efficiency (Capital Expenditure Return)

  The report focuses on evaluating the efficiency of the company's additional ¥80bn capital expenditure, comparing it with the regular 10% expansion. The core is to judge how much additional revenue and profit can be brought by each unit of capital input. This focus on capital efficiency is a key link in free cash flow analysis for assessing a company's long-term value creation capability.

• Company Fundamentals & Financial FrameworkProfitability Quality Analysis

  Dual Drivers of ASP Increase: Product Structure Optimization and Price Rigidity

  The report does not simply attribute ASP increase to price hikes, but analyzes two independent but synergistic drivers: 'rising share of high-end products' and 'traditional products no longer falling in price'. This reflects a deep analysis of profitability quality, avoiding a one-sided understanding of pricing power.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Murata Manufacturing (6981.T)

  Core target of the report, directly benefiting from strong demand for high-end MLCCs driven by AI/Data Centers and AI Edge Devices.

  Strengths

  Technologically leading in the advanced MLCC field, possessing dual supply capabilities for embedded MLCCs and silicon capacitors, with extremely high investment efficiency.

  Weaknesses

  Current stock price is significantly above the target price, facing large valuation pressure; highly sensitive to global macroeconomics and high-end smartphone demand.

  Comparison

  The report did not conduct direct comparisons with other MLCC manufacturers but emphasized its unique advantages in the advanced product field.

  Risks

  If demand for high-end smartphones is weaker than expected, or if the global macroeconomy declines significantly, it will affect demand and prices for its core products.

Key data

• YoY Sales Growth Rate of MLCC Sales Related to AI/DC85-90% YoYYear-over-year growth rate of F3/27 relative to F3/26
• Sales Share of MLCC Sales Related to AI/DC20-25%Estimated percentage of total MLCC sales in F3/27, increased from 10-15% in F3/26
• Additional Capital Expenditure¥80bnExtra capital expenditure used for expanding capacity for advanced MLCC products
• Overall MLCC Sales Growth Rate20–25% YoYExpected in F3/28, significantly accelerating compared to the 13% growth rate of F3/27
• Target Price¥5,100Based on DCF model, 12-18 month time frame
• Current Stock Price¥8,077Closing price as of May 26, 2026

Impact & implications

The report believes that凭借 Murata Manufacturing leveraging its technological leadership in the advanced MLCC field and high investment efficiency, it is transforming from a passive passive component supplier to a key enabler of AI infrastructure. Its business model is shifting from "volume and price rise" to "profit driven by high-value product structure", which improves the company's profitability quality and long-term valuation resilience. Although the current stock price is higher than the target price, the report believes its growth prospects and investment efficiency are sufficient to support its long-term allocation value as an industry leader.

Risks

• Global macroeconomic fluctuations may cause significant volatility in electronic equipment demand and MLCC unit prices.
• If demand for high-end smartphones is weaker than expected, it will impact company sales.

What to watch

• Actual growth situation of market demand for AI/Data Centers and AI edge devices.
• Execution progress and capacity release of the company's additional ¥80bn capital expenditure.
• Trend of the share of high-end MLCC products in total sales revenue.
• Whether the price trend of traditional MLCC products tends to stabilize.