MLCC: MLCC inventories keep falling while unit prices rise, reinforcing UBS’s favourable sector view

Overview

This UBS Evidence Lab update tracks MLCC distributor inventories and prices across more than 100 global distributors. It finds continued inventory depletion and price appreciation, which UBS views as supportive for high-end MLCC makers benefiting from AI-server demand.

Core views

UBS’s upgraded Electronics Distributor Inventory Monitor, covering more than 100 distributors globally from September 2021 and including data through 12 September, continued to show a tightening MLCC market. Relative to 8 August, distributor inventory volume fell 6%, while inventory value rose 8% and the unit-price index increased 10%. UBS notes that the broad direction was unchanged from earlier readings, although the pace of volume reduction and value growth moderated slightly. The quarter-to-date CQ3 movement was more pronounced: volume was down 25%, inventory value was up 16%, and unit prices were up 20%. This contrasts with CQ2, when volume fell 16% quarter-on-quarter but inventory value was flat and unit prices increased only 5%. The inventory-price pattern was broad across the key manufacturers. Over the five weeks to 12 September, inventory volume declined 10% for Murata, 13% for SEMCO, 3% for Yageo, 6% for TDK and 5% for Taiyo Yuden. At the same time, inventory value rose 7%, 15%, 15%, 5% and 13%, respectively, while unit-price indices rose 7%, 25%, 12%, 9% and 8%. CQ3-to-date volume declines were especially steep for SEMCO at 50% and Murata at 26%; SEMCO’s unit-price index rose 53%, followed by Taiyo Yuden at 33%, Yageo at 21%, TDK at 20% and Murata at 17%. UBS interprets the simultaneous decline in units and rise in values and prices as evidence that favourable MLCC fundamentals persist. The demand backdrop supports that conclusion, according to UBS’s 3Q26 APAC Tech Tour. AI-related demand remained strong, whereas PC and smartphone demand was sluggish because of memory supply constraints. UBS highlights expectations that MLCC demand for AI servers could double year-on-year both this year and next. Capacity additions are also arriving ahead of schedule: Murata revised its planned capacity expansion from +10% this year and +25% next year to +17% in each year. Pricing remains a key mechanism in the thesis: SEMCO plans to revise OEM/OEM-customer prices in CQ4, with increases potentially reaching nearly 30% depending on application, while Murata has indicated that its pricing environment is changing rapidly. Japanese producers are also shifting capacity toward higher-value-added products. For stocks, UBS favours companies with strong high-end-product exposure where it sees structural growth. It assigns Buy ratings to SEMCO, Murata and TDK, while Taiyo Yuden is rated Neutral. The report also identifies sector and company-specific risks, including macro and end-demand weakness, materials-cost changes, FX moves, competition and technology substitution, capacity-driven oversupply, and supply-chain disruption from tariffs or geopolitics.

Analysis framework

UBS combines its Evidence Lab distributor dataset with industry observations from its APAC Tech Tour. It compares changes in normalized inventory units, inventory value and unit-price indices across manufacturers, then connects those movements with AI-server demand, capacity plans and pricing actions to assess MLCC sector conditions and stock implications.

Methodology notes

• Industry AnalysisSupply-demand framework

  Distributor inventory, inventory value and unit-price monitoring by manufacturer

  UBS uses falling inventory units alongside rising inventory value and prices as indicators of tighter supply-demand conditions in MLCCs.

• Valuation methodsP/E and PEG Valuation

  P/E or PER-based price-target valuation for Murata, Taiyo Yuden, TDK and Three-Circle

  The report states that these companies’ price targets are derived using P/E-based valuation.

• Valuation methodsPB valuation

  Forward P/BV valuation for Samsung Electro-Mechanics

  UBS states that SEMCO’s price target is based on forward P/BV, using long-term average ROE and cost-of-equity assumptions.

Asset mapping & comparison

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

• Samsung Electro-Mechanics (SEMCO)

  Covered MLCC producer benefiting from rising prices and AI-related demand

  Strengths

  Largest five-week inventory-volume decline among named makers at -13%; unit-price index rose 25%, and CQ3-to-date unit-price index rose 53%.

  Weaknesses

  High customer concentration toward Samsung Electronics, at about 50% of total revenue.

  Comparison

  UBS notes Japanese MLCC makers as SEMCO’s principal competitors; yen depreciation against the won could reduce SEMCO’s price competitiveness.

  Risks

  Customer concentration, weaker IT/industrial/automotive demand, FX competition and trade-dispute effects.

• Murata Manufacturing

  Covered MLCC producer favoured for high-end product exposure

  Strengths

  Inventory volume fell 10% over five weeks while value rose 7% and unit prices rose 7%; capacity expansion was revised to +17% in both this year and next year.

  Comparison

  Murata’s CQ3-to-date inventory-volume decline was -26%, less severe than SEMCO’s -50% but greater than the declines for Yageo, TDK and Taiyo Yuden.

  Risks

  Core-product demand weakness, equity or FX volatility, technology diffusion, IC substitution and competition from other capacitor types.

• TDK

  Covered MLCC producer favoured for high-end product exposure

  Strengths

  Five-week inventory volume fell 6%, while inventory value rose 5% and unit prices rose 9%.

  Comparison

  Its five-week unit-price increase of 9% was below SEMCO’s 25% and Yageo’s 12%, but above Taiyo Yuden’s 8% and Murata’s 7%.

  Risks

  Lower component prices and volumes in a global slowdown, technology delays, market-share loss, yen strength, and potential litigation or controversy.

• Taiyo Yuden

  Covered MLCC producer rated Neutral by UBS

  Strengths

  Inventory value rose 13% and the unit-price index rose 8% over five weeks; CQ3-to-date inventory value increased 70%.

  Weaknesses

  Its CQ3-to-date inventory-volume decline of 1% was materially less pronounced than peers.

  Comparison

  UBS rates Taiyo Yuden Neutral, versus Buy ratings for SEMCO, Murata and TDK.

  Risks

  Demand weakness, US equity-market and FX volatility, technology commoditization, substitution by other capacitors or semiconductor advances, and DVD-media oversupply.

• Chaozhou Three-Circle

  Covered Chinese MLCC producer

  Strengths

  UBS assigns a Buy rating in its coverage table.

  Comparison

  UBS notes Chinese MLCC companies’ competitiveness relative to Japanese and Korean peers can be sensitive to FX.

  Risks

  Slower recovery in home-appliance and industrial demand, inventory correction, slower high-end-market penetration, capacity oversupply and geopolitical disruption to the consumer-electronics value chain.

Key data

• MLCC inventory volume-6%Change from 8 August to 12 September
• MLCC inventory value+8%Change from 8 August to 12 September
• MLCC unit price index+10%Change from 8 August to 12 September
• CQ3-to-date inventory volume-25%Quarter-to-date change
• CQ3-to-date inventory value+16%Quarter-to-date change
• CQ3-to-date unit price index+20%Quarter-to-date change
• SEMCO unit price index+25%Five-week change to 12 September
• SEMCO CQ3-to-date unit price index+53%Quarter-to-date change
• AI-server MLCC demandCould double year-on-year this year and next yearUBS APAC Tech Tour observation
• Murata capacity expansion plan+17% this year / +17% next yearRevised from +10% / +25%

Impact & implications

UBS views shrinking distributor inventories and rising prices as supportive for MLCC producers, particularly those exposed to high-end applications and AI servers. The firm sees the price environment, capacity reallocation toward higher-value products and AI demand as favourable, while consumer-device weakness remains a counterweight.

Risks

• Sector risks include sudden changes in macro conditions, including US consumption, financial-market volatility, and base-material cost changes in petrochemicals and metals.
• MLCC earnings could be pressured by inventory correction, capacity-driven oversupply and price competition.
• Consumer electronics, IT, industrial and automotive end-demand may weaken, particularly given sluggish PC and smartphone demand.
• FX movements, technology diffusion or substitution, and intensifying competition could erode manufacturers’ competitiveness.
• Tariffs, geopolitics and trade disputes could disrupt the supply chain, reduce end-demand or compress valuation multiples.

What to watch

• Further changes in distributor inventory units, values and unit-price indices across MLCC manufacturers.
• Whether AI-server MLCC demand reaches the reported expectation of doubling year-on-year this year and next year.
• SEMCO’s planned CQ4 OEM/OEM-customer price revisions, which could reach nearly 30% depending on application.
• Murata’s execution of its revised +17% capacity-expansion plan for both this year and next year.
• The effect of memory supply constraints on PC and smartphone demand, and the pace of Japanese producers’ shift toward high-value-added products.