MLCC prices are rising, but cost pass-through is limited; the iPhone supply chain is relatively more favored
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MLCC prices are rising, but cost pass-through is limited; the iPhone supply chain is relatively more favored
JPMorgan believes tight MLCC supply is driving steady price increases, but because MLCC accounts for only about 2-3% of BOM costs for most consumer electronics, the downstream cost impact is limited; in stock selection, it prefers Luxshare Precision and Cowell e Holdings.
- Year-to-date MLCC spot market prices have risen 250-300%, but contract prices have increased more moderately.
- Capacity utilization exceeds 90% for international suppliers and 80% for domestic suppliers, while new capacity additions have been limited since 2019.
- Server MLCC shipment demand in 2026 is expected to be about 2.5x that of 2025, and lower yields for server-grade products may further tighten supply.
- MLCC accounts for about 2-3% of BOM costs for most consumer electronics, so even a roughly 20% price increase is still considered to have a limited impact on end-product costs.
- The report remains cautious on the Android smartphone supply chain and is more constructive on the iPhone supply chain, with Luxshare Precision and Cowell e Holdings as top picks.
Report interpretation
Overview
Based on an industry expert call and discussions with Fenghua Advanced Technology, this report reviews changes in supply, demand, and pricing in China's MLCC market. The core conclusion is that MLCC supply is tightening due to limited new capacity additions, high capacity utilization, and demand driven by AI servers, resulting in a significant rise in spot prices; however, because MLCC represents a low share of BOM costs for most consumer electronics, its impact on downstream costs is limited.
Core views
The report views the MLCC price increase as the result of tight supply and a product mix shift toward higher-ASP categories. High-end supply is mainly concentrated among Japanese and Korean manufacturers and is prioritized for AI server-grade products, while low-end supply is becoming tighter due to speculation and spillover effects. On the downstream side, the report remains cautious on consumer electronics, especially the Android smartphone supply chain, but is more positive on the iPhone supply chain, citing stronger-than-expected shipments, a more favorable product mix, and support from new product launches.
Analysis framework
The analysis is carried out along several lines, including supply and demand, capacity utilization, pricing patterns, yield differences, and BOM cost pass-through, and distinguishes the impact of upstream MLCC price increases on downstream consumer electronics, servers, automotive, and industrial applications.
Methodology notes
Assess pricing, capacity utilization, and demand changes through discussions with industry experts and companies.
The report cites industry expert calls and discussions with Fenghua Advanced Technology to assess MLCC pricing, the degree of supply tightness, and changes in downstream demand in the China market.
Measure the impact of price increases on end-product costs based on the share of key components in BOM.
The report estimates that MLCC accounts for about 2-3% of BOM costs for most consumer electronics and therefore concludes that even if MLCC prices rise, the overall cost impact on end products remains limited.
Differentiate between upstream MLCC supply tightness and demand strength across different downstream end markets.
The report does not simply equate MLCC price increases with broad downstream benefits; instead, it evaluates Android, iPhone, server, automotive, and industrial applications separately and derives supply chain preferences accordingly.
Asset mapping & comparison
Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).
- Luxshare Precision-A (002475.SZ)One of the top downstream picks in the iPhone supply chain
- Strengths
- Benefits from stronger-than-expected iPhone shipments, improved product mix, and new product launches, while the cost impact of MLCC price increases is limited.
- Weaknesses
- Still exposed to fluctuations in consumer electronics demand and upward pressure on component costs.
- Comparison
- Compared with the Android supply chain, the report is more favorable toward the iPhone supply chain.
- Risks
- If iPhone demand falls short of expectations or price increases in MLCC and memory components exceed expectations, earnings leverage may come under pressure.
- Cowell e Holdings-H (1415.HK)One of the top downstream picks in the iPhone supply chain
- Strengths
- Benefits from new iPhone products, shipments, and improved product mix, and the report assigns an Overweight rating.
- Weaknesses
- The company's performance still depends on core customer orders and the consumer electronics cycle.
- Comparison
- Alongside Luxshare Precision, it is one of the report's preferred names in the downstream supply chain.
- Risks
- If demand in the iPhone supply chain declines or cost increases cannot be absorbed smoothly, share price and earnings expectations may come under pressure.
- Android smartphone supply chainA downstream segment on which the report takes a cautious view
- Strengths
- MLCC price increases themselves have a limited impact on BOM costs.
- Weaknesses
- Related demand has weakened starting in 2Q26.
- Comparison
- Compared with the iPhone supply chain, the Android supply chain is less attractive in terms of demand and product mix.
- Risks
- Continued demand weakness, rising memory costs, and pressure from component inventory restocking may compress margins.
- Mainland China MLCC suppliersMay benefit from spillover in non-AI high-capacitance orders
- Strengths
- After high-end supply is prioritized for AI server-grade products, non-AI high-capacitance products may see order spillover.
- Weaknesses
- High-end product supply remains concentrated among Japanese and Korean manufacturers, while domestic suppliers already have relatively high capacity utilization.
- Comparison
- High-end AI server-grade products are dominated by Japanese and Korean manufacturers, while domestic companies are more likely to capture non-AI high-capacitance demand.
- Risks
- If speculative demand recedes, capacity expansion comes online, or end demand falls below expectations, the sustainability of price increases may weaken.
Key data
- MLCC spot price increaseUp 250-300% year to dateThe increase is mainly reflected in the spot market, while contract pricing remains relatively moderate.
- MLCC share of BOM costAbout 2-3%Applicable to most consumer electronics applications, such as smartphones.
- Hypothetical impact of MLCC price increaseA roughly 20% price increase has limited impactThe report believes that accepting price increases to avoid potential supply disruptions would not have a major impact on end-product costs.
- Capacity utilizationAbove 90% for international suppliers, above 80% for domestic suppliersNew capacity additions have been limited since 2019, and suppliers are operating near full capacity.
- Server MLCC demandAbout 2.5x 2025 in 2026Server demand is seen as an important driver of this cycle.
- Server-grade MLCC yieldAbout 45%-65%Below the 85%-95% yield of standard products, potentially further exacerbating supply shortages.
- Luxshare Precision closing price and ratingRMB 67.26, OverweightPrice as of the close on 2026-06-16.
- Cowell e Holdings closing price and ratingHKD 26.34, OverweightPrice as of the close on 2026-06-16.
Impact & implications
From an investment perspective, the rise in MLCC prices mainly reflects upstream supply tightness and strong AI server demand, rather than a broad loss of control over downstream consumer electronics costs. Downstream stock selection should focus on the iPhone supply chain, where demand is stronger and product mix is better, while remaining alert to weakening Android smartphone demand starting in 2Q26. Mainland Chinese companies may benefit from spillover in non-AI high-capacitance orders, but high-end supply remains dominated by Japanese and Korean manufacturers.
Risks
- Demand in the Android smartphone supply chain has weakened starting in 2Q26.
- Rising memory costs combined with MLCC price increases may pressure margins for some downstream players.
- Server-grade MLCC yields are relatively low; if demand continues to exceed expectations, supply shortages may intensify.
- High-end MLCC supply is concentrated among Japanese and Korean manufacturers, and the degree to which mainland Chinese companies benefit depends on the scale of order spillover.
- If the recovery in automotive and industrial demand is not sustained, support for price increases in non-AI high-capacitance products may weaken.
- The report discloses that JPMorgan has interests involving market making, client relationships, potential investment banking compensation, or debt positions with some covered companies.
What to watch
- Whether the gap in price increases between MLCC spot prices and contract prices continues to widen.
- Whether capacity utilization among international and domestic MLCC suppliers remains elevated.
- Whether MLCC demand from servers and AI servers in 2026 reaches the expectation of about 2.5x 2025 levels.
- Whether server-grade MLCC yields improve and supply shortages ease.
- Whether non-AI high-capacitance orders continue to spill over to mainland Chinese companies.
- Whether Android smartphone demand continues to weaken.
- Whether iPhone shipments, product mix, and the new product cycle continue to support supply chain names.