AI server demand lifts Japanese electronic component stocks, while the MLCC rally may enter a range-bound phase in the short term

Overview

This report is JPMorgan's investor feedback on the Japanese electronic components sector. The research team met investors in Hong Kong and Singapore from June 22 to 26, 2026, and found that market attention was highly concentrated on passive components, especially companies centered on MLCCs. Expectations for AI server demand have driven strong gains in related stocks since April, but investors are clearly divided on whether this represents a new earnings normal or simply reflects excessive valuations.

Core views

The core view is that AI server demand remains the main theme for the electronic components sector, but share prices have already rapidly reflected future growth, making it harder to chase the rally in the short term. Many investors still hold Murata, while early entrants in Taiyo Yuden have begun taking profits, and relative trades such as long Murata/short Taiyo Yuden or TDK have emerged in the market. Although TDK is a later entrant in AI server MLCCs, investors expect it to benefit from tightening supply-demand, AI server power inductors, LFP backup battery units, and increased HDD head share. The focus for Nichicon and Nippon Chemi-Con is whether they can go beyond passing through aluminum costs and implement larger price hikes.

Analysis framework

The report mainly uses an investor roadshow feedback approach, assessing market consensus, crowding, and next-stage catalysts for the Japanese electronic components sector through investor questions, holding preferences, profit-taking behavior, long-short pairings, and discussions of valuation timeframes in meetings held in Hong Kong and Singapore.

Methodology notes

• Market feedbackInvestor roadshow feedback

  Measure market attention through investor questions and trading intentions

  Based on the companies, themes, and long-short ideas most frequently raised during investor meetings in Hong Kong and Singapore from June 22 to 26, the research team summarized market consensus and divergence.

• Relative valueLong-short pair observation

  Identify crowded trades and relative preferences through long and short combinations

  The report mentions combinations such as long Murata/short Taiyo Yuden or long Murata/short TDK, reflecting relative valuation and momentum rotation within the AI server supply chain.

• Supply-demand cycleAI server component supply-demand tracking

  Assess the next round of price momentum through high-end MLCC demand, 2027 negotiations, and supply chain tightness

  The report believes demand for high-end AI server MLCCs may emerge in October-December, and as 2027 negotiations progress, supply tightness may become clearer and create the potential for price increases.

Asset mapping & comparison

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

• Murata Manufacturing

  Core beneficiary in MLCCs and passive components

  Strengths

  Many investors continue to hold it, benefiting from expectations of AI server MLCC demand and tighter supply-demand.

  Weaknesses

  The share price has already risen sharply, leaving limited room for further upside driven by AI server MLCC expectations in the short term.

  Comparison

  Relative to Taiyo Yuden, Murata is more often used as the long leg; relative to TDK, long Murata/short TDK combinations have also appeared.

  Risks

  If there is no new demand or pricing catalyst in July-September, the stock may enter range-bound trading.

• Taiyo Yuden

  High-beta MLCC-related name

  Strengths

  Its roughly 5.6x gain from late March to mid-June reflects strong market expectations for AI server MLCCs.

  Weaknesses

  Quarterly profit remains low, and some early-entry investors are taking profits.

  Comparison

  Used by some investors as the short leg paired with long Murata; some investors also hope to re-enter at ¥150,000-¥160,000.

  Risks

  There is downside risk after earnings releases, and the gap between valuation and profit delivery may amplify volatility.

• TDK

  Late AI server MLCC entrant and beneficiary in inductors, LFP, and HDD-related products

  Strengths

  Investors believe it can benefit from tighter MLCC supply-demand, AI server thin-film metal inductors, LFP backup battery units, and increased HDD head share.

  Weaknesses

  It is a late entrant in AI server MLCCs, and some investors also use it as the short leg in relative trades.

  Comparison

  Some long-term investors shifted attention to TDK after finding it hard to chase Murata and Taiyo Yuden higher.

  Risks

  If MLCC supply-demand tightening or inductor demand falls short of expectations, valuation support may prove insufficient.

• Nichicon and Nippon Chemi-Con

  Potential beneficiaries in aluminum electrolytic capacitors and 800V HV-DC

  Strengths

  Investors are focused on growth in long-L MLCC demand for 800V HV-DC and PSUs, and believe both companies may benefit.

  Weaknesses

  Current-quarter profit remains low, and the market is concerned about downside risk after earnings releases.

  Comparison

  Compared with Murata and Taiyo Yuden, the focus is more on pricing power and cost pass-through ability.

  Risks

  If price increases are limited to passing through aluminum costs rather than larger hikes, the stock thesis may come under pressure.

• Ibiden

  Beneficiary of demand for AI server GPUs, ASICs, and general server CPUs

  Strengths

  Investors expect expansion in demand for AI server GPUs, ASICs, and general server CPUs, and also expect the next capacity expansion announcement to boost the stock.

  Weaknesses

  The stock is already trading on FY2030 earnings, and the market is asking how much further the valuation timeframe can be pushed.

  Comparison

  Some investors are not chasing Ibiden’s upside momentum and are instead looking to buy passive component stocks on pullbacks.

  Risks

  If capacity expansion or expectations for upward revisions to FY2030 profit fail to materialize, the valuation may face compression.

• Rohm

  Beneficiary of analog discrete semiconductors and AI server Si-MOSFET shortages

  Strengths

  Rising Kioxia share prices increase the value of its holdings, while 80-100V Si-MOSFET shortages create expectations for earnings growth.

  Weaknesses

  Attention has risen rapidly recently, which may cause expectations to be priced in early.

  Comparison

  Inquiries from European and U.S. investors have increased since May, with interest rising further over the past 1-2 weeks.

  Risks

  If tight supply-demand in analog discrete semiconductors eases, expectations for earnings recovery may be revised down.

• Hirose Electric

  Connector name with expectations for upward earnings guidance revision

  Strengths

  The market has relatively high expectations for better-than-expected FY3/27 guidance, with strong focus from an earnings perspective.

  Weaknesses

  The report does not provide detailed valuation or order data support.

  Comparison

  Compared with MLCC names, Hirose Electric is more driven by earnings delivery logic.

  Risks

  If FY3/27 guidance fails to exceed expectations, the trading thesis may weaken.

• MinebeaMitsumi

  Related to fan motor bearings and BBU battery protection modules

  Strengths

  Earnings are strong, and the market believes CPU demand from physical AI and agentic AI applications may drive demand for fan motor bearings, while BBU battery protection modules also offer incremental growth.

  Weaknesses

  The share price has risen sharply, and valuation is significantly above the historical range.

  Comparison

  Some investors recognize the new demand thesis, while others believe the valuation requirements are too demanding.

  Risks

  If demand for AI-related fan motor bearings or BBU modules falls short of expectations, valuation pressure will be high.

• Alps Alpine and Kyocera

  Electronic component stocks with heavier short-side focus

  Strengths

  Kyocera faces share buyback risk, making some investors unwilling to short it at present.

  Weaknesses

  Alps Alpine is shorted by many investors; Kyocera’s share price and valuation are both significantly above historical ranges.

  Comparison

  Compared with long names in the AI server supply chain, these stocks are more often used for hedging or expressing short views.

  Risks

  Buybacks, further valuation expansion, or continued market momentum could hurt short trades.

Key data

• Investor visit periodJune 22-26, 2026The locations were Hong Kong and Singapore.
• Murata share price performanceUp about 3.6xMeasured from late March to mid-June.
• Taiyo Yuden share price performanceUp about 5.6xMeasured from late March to mid-June, significantly above TOPIX over the same period.
• TOPIX performance over the same periodUp about 17%Used to compare the excess gains of major MLCC-related stocks.
• Years of profit growth already priced inAbout 3-4 yearsThe report estimates that April-June MLCC-related share prices have already priced in multiple years of profit growth from expanding AI server demand.
• Next potential momentum windowOctober-December 2026The report expects high-end AI server MLCC demand and progress in 2027 negotiations to become new catalysts.
• Long-L MLCC demand elasticityAbout 3x at 200V to 400V, and about 4x at 800VThis demand is related to PSUs and 800V HV-DC.
• Ibiden FY2030 operating profit target¥300.0bnInvestors are focused on whether there is still room for upward revision, but the stock is already trading on FY2030 earnings.

Impact & implications

The investment implication highlighted by the report is that demand for AI server-related components still has medium-term growth potential, but the market has already priced in a large portion of this in the short term, shifting the risk-reward balance from simply chasing the rally to waiting for pullbacks, relative-value trades, and identifying the next-stage catalysts. If there is no new evidence of MLCC price increases or orders in July-September, share prices may remain range-bound; if supply chain tightness and 2027 negotiations materialize in October-December, the sector may regain upward momentum.

Risks

• April-June share prices have already priced in about 3-4 years of profit growth from AI server demand, creating high near-term valuation overextension risk.
• Current-quarter profits remain low for companies such as Taiyo Yuden, Nichicon, and Nippon Chemi-Con, creating potential downside risk after earnings releases.
• If there are no new AI server MLCC catalysts in July-September, related stock prices may remain range-bound.
• Valuations of some names are already significantly above historical ranges; if demand delivery or price increase magnitude is insufficient, valuations may compress.
• Short trades carry reversal risks from buybacks, momentum persistence, and market crowding.

What to watch

• After April-June earnings releases, whether pullback buying opportunities emerge in MLCC and passive component stocks.
• Whether demand for high-end and leading-edge AI server MLCCs becomes visible in the supply chain in October-December.
• Whether 2027 supply negotiations confirm MLCC tightness and lead to price increases.
• Whether price increases at Nichicon and Nippon Chemi-Con are limited to aluminum cost pass-through or can achieve larger hikes.
• Ibiden’s next capacity expansion announcement and whether there is room for upward revision to its FY2030 operating profit target.
• TDK’s delivery progress in AI server power inductors, LFP backup battery units, and HDD head share.
• Changes in Rohm’s 80-100V Si-MOSFET shortage and the value of its Kioxia holdings.
• The degree of trade crowding in high-valuation or short-focused names such as Alps Alpine, Kyocera, and MinebeaMitsumi.