MLCC and ABF substrates continue to draw strong interest from U.S. investors after the pullback

Overview

This report is JPMorgan's industry market feedback following visits with U.S. investors, covering Japan's electronic components sector and focusing on MLCC, FC-BGA/ABF substrates, and analog/discrete semiconductors. The report notes that electronic components stocks have corrected significantly since early July, but investor interest in FC-BGA substrates, ABF substrates, and MLCCs remains strong, with discussions centered on medium- to long-term earnings forecasts, AI server-related demand, capacity expansion, tight supply-demand conditions, and the possibility of future price increases.

Core views

The core view is that the share price pullback has not weakened investor interest in the medium- to long-term fundamentals of MLCC and ABF substrates; instead, it has prompted some long-only funds and hedge funds to start looking for buying opportunities. On MLCC, higher AI accelerator shipments, rising average TDP, Nvidia's transition to higher-end products, and rapid migration by ASIC customers toward 1005/47uF and 1608/100uF capacitors could drive revenue and earnings growth. On pricing, Korean manufacturers have already begun signing annual contracts for next-generation MLCC for 2027, but mid- to high-end products have not yet seen price increases; JPMorgan expects preliminary price hikes for mid- to high-end MLCC may emerge starting in August, with the key question being whether Japanese manufacturers will follow.

Analysis framework

The report is based on feedback from marketing visits with U.S. investors between July 20 and 24, 2026, summarizing investor focus areas on major Japanese electronic components companies and combining this with JPMorgan's views on AI server demand, product mix premiumization, tight supply-demand conditions, capacity expansion, and pricing strategy to form its industry observations.

Methodology notes

• Market feedbackInvestor marketing feedback

  Identifying shifts in market expectations through questions and focus areas from institutional investors

  Rather than a traditional deep-dive valuation model, the report summarizes U.S. investors' discussion focus on MLCC, ABF substrates, and related stocks to assess market sentiment, potential buying points, and future catalysts.

• Industry driversAI server demand chain

  Higher AI accelerator volumes, rising TDP, and product premiumization drive MLCC demand and margins

  JPMorgan believes that growth in AI accelerator volumes, higher average thermal design power, and a shift from general-purpose products toward high-end and next-generation products will affect MLCC company earnings through pricing premiums and product mix improvement.

Asset mapping & comparison

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

• Murata Manufacturing

  Core beneficiary in MLCC

  Strengths

  Benefiting from AI server MLCC demand, product premiumization, and potential pricing premiums; interest from long-only Western investors has risen after the share price pullback.

  Weaknesses

  Its share price had previously moved quickly and sharply, causing some long-only investors to remain on the sidelines.

  Comparison

  Along with Taiyo Yuden, it is one of the MLCC stocks most discussed by investors; if competitors raise prices, Murata Manufacturing may reconsider its pricing strategy.

  Risks

  It remains uncertain whether Japanese manufacturers will follow with price increases; if tight supply-demand conditions or the shift to high-end products fall short of expectations, earnings upside may be delayed.

• Taiyo Yuden

  MLCC-related beneficiary

  Strengths

  Investor interest has increased after the share price pullback, benefiting from discussions around AI servers and demand for high-end MLCC.

  Weaknesses

  Also affected by the high-volatility characteristics of MLCC stocks.

  Comparison

  Together with Murata Manufacturing, it is seen as an MLCC stock regaining attention from long-only Western investors.

  Risks

  Price increases, sales growth, capacity expansion, and supply-demand trends all require further validation.

• Ibiden

  FC-BGA/ABF substrate and ASIC-related beneficiary

  Strengths

  Investors are focused on earnings upside from EMIB-T for ASICs, as well as the contribution from potential capacity expansion in FY2029-30.

  Weaknesses

  There are currently no plans to raise prices on mass-production products, so earnings upside depends more on pricing for new products and future expansion.

  Comparison

  Compared with MLCC stocks, the focus for Ibiden is more concentrated on ABF substrates, ASIC demand, and long-term capacity planning.

  Risks

  There is execution uncertainty around new facility construction, acquisition of external fabs, capacity expansion, and premium pricing strategies for new products.

• Rohm

  Analog/discrete semiconductor and power semiconductor-related name

  Strengths

  U.S. and European technology investors have become more positive on analog/discrete semiconductors, and tightening industry supply with rising prices is helping lift interest.

  Weaknesses

  Inventory reduction may continue through April-June, and a meaningful improvement in operating profit is expected no earlier than 2Q.

  Comparison

  Results for Texas Instruments and STMicroelectronics in April-June and guidance for July-September both came in above market consensus, supporting investor attention on Rohm's demand recovery.

  Risks

  There are strategic and control risks in the integration of Toshiba's semiconductor business and the framework for integration with Mitsubishi Electric's power semiconductor business.

• Hirose Electric

  Name tied to recovery in industrial machinery demand

  Strengths

  The broad recovery in industrial machinery demand is raising investor expectations for earnings upside.

  Weaknesses

  The report provides limited company-specific detail and lacks clear quantified earnings metrics.

  Comparison

  Compared with MLCC and ABF substrate names, the focus for Hirose Electric is more on the recovery in industrial machinery demand.

  Risks

  If the recovery in industrial machinery demand falls short of expectations, earnings upside expectations may decline.

• Nidec

  Name tied to data center and industrial machinery demand

  Strengths

  U.S. investor interest is stronger than that of Asian investors, with attention on demand for data center alternators and the impact of a broader industrial machinery recovery.

  Weaknesses

  Investors asked extensively about the future timeline and the possibility of remaining listed or delisting, indicating high uncertainty around company events.

  Comparison

  Compared with other electronic components companies, discussion around Nidec is more concentrated on the path of company events and listing status.

  Risks

  There is uncertainty around the listing/delisting path, timeline, and demand realization.

Key data

• U.S. investor visit period2026-07-20 to 2026-07-24The main report states that JPMorgan visited U.S. investors during this period.
• Key discussion areasFC-BGA substrates, ABF substrates, MLCCsDespite the pullback in electronic components stocks, investor interest remained concentrated in these areas.
• Key stocks discussedMurata Manufacturing, Taiyo Yuden, TDK, Ibiden, Rohm, Hirose Electric, NidecThe report states that these stocks were widely discussed by U.S. investors.
• Potential MLCC pricing catalystPreliminary price increases in mid- to high-end MLCC may appear starting in AugustKorean manufacturers have not yet raised prices for mid- to high-end products in 2027 contracts; the next focus is whether Japanese manufacturers will follow.
• J.P. Morgan Global Equity Research rating distributionOverweight 53%; Neutral 36%; Underweight 12%From the disclosure table in the report; percentages may not total 100% due to rounding.

Impact & implications

From an investment perspective, following the sector pullback, MLCC- and ABF substrate-related stocks may be entering a watchlist or buy-on-dip window, but investors are still waiting for clearer evidence of price increases, realization of tighter supply-demand conditions, earnings improvement, or other market participants moving first. If Japanese manufacturers follow competitors in adjusting prices, earnings expectations for MLCC companies such as Murata Manufacturing and Taiyo Yuden could be revised further upward; if Ibiden executes on capacity expansion and pricing for new products, its FY2029-30 earnings upside could attract greater attention.

Risks

• Price increases for mid- to high-end MLCC have not yet been confirmed, and whether Japanese manufacturers will follow competitors in raising prices remains a key uncertainty.
• The electronic components sector as a whole is still in a pullback; although investors have buying interest, many are still waiting for other capital to move first.
• If AI server demand, higher TDP, and the shift to high-end products fall short of expectations, the MLCC earnings growth scenario may come under pressure.
• Rohm's inventory reduction and industry consolidation may weigh on short-term operating profit improvement.
• There are execution risks around Ibiden's expansion, new product pricing, and potential acquisition of external capacity.

What to watch

• Whether preliminary price increases in mid- to high-end MLCC emerge after August.
• Whether Japanese MLCC manufacturers follow Korean competitors in adjusting pricing strategy.
• The pace of Nvidia's high-end product transition and ASIC customer migration toward 1005/47uF and 1608/100uF capacitors.
• Progress by Ibiden in building new facilities in vacant areas at the Gama and Ono Plants or acquiring external fabs.
• Whether Rohm's operating profit improves after 2Q as inventory reduction ends.
• Nidec's future timeline, listing status, and changes in demand for data center alternators.