ABF substrates remain strong, Si MOSFET demand is rising

Overview

This report tracks the March 2026 electronic components and semiconductor production statistics released by Japan's Ministry of Economy, Trade and Industry (METI). The core conclusion is that March domestic production was overall slightly better than or in line with seasonality: electronic components were slightly above the seasonal average, while semiconductors were roughly in line with seasonality. Structurally, rigid module substrates, memory, and Si MOSFETs were strong; passive components were still weighed down by YoY weakness in categories such as MLCCs, although MoM recovery had begun.

Core views

The report believes that shipment value for rigid module substrates such as ABF/FC-BGA continued to grow strongly, which is mildly positive for substrate-related companies such as Ibiden. Si MOSFET production is expected to continue strong YoY growth, with demand for low-voltage and medium-voltage products likely supported by the expansion of AI servers. At the same time, the stagnation in MLCC production that began in the second half of 2025 is still ongoing, and after stripping out the impact of a weaker yen, the recovery in passive components remains limited.

Analysis framework

The report uses METI monthly production statistics to compare March 2026 production value, output, YoY and MoM changes for electronic components and semiconductors against the 20-year seasonal average and historical trends, while also incorporating post-4Q earnings top-pick judgments.

Methodology notes

• Industry high-frequency data trackingMETI production statistics analysis

  Use Japan's METI monthly production statistics to observe the production cycle of electronic components and semiconductors.

  The report compares YoY, MoM, and seasonal performance across categories such as electronic components, passive components, electronic substrates, semiconductors, memory, MCU, logic ICs, and discrete semiconductors to judge demand and inventory-cycle changes.

• Seasonal comparison20-year seasonal average comparison

  Compare the current month's MoM growth against the seasonal average for the same period over the past 20 years.

  If output or value is above the seasonal average, it indicates that production intensity in the month was stronger than the normal seasonal pattern; based on this, the report judges electronic components to be slightly above seasonality and semiconductors to be roughly in line with seasonality.

• Subsegment mappingAI server demand transmission

  AI server demand is driving low-voltage and medium-voltage Si MOSFETs as well as high-end substrate demand.

  The report links Si MOSFET growth and the strength of ABF/FC-BGA substrates to AI server-related demand, using this to identify beneficiary areas within the electronic components sector.

Asset mapping & comparison

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

• Murata Manufacturing (6981.T)

  One of the top picks in the electronic components sector, rated OW.

  Strengths

  Benefits from the MoM recovery in electronic components and improving sector conditions; covered price is ¥6,180.

  Weaknesses

  YoY declines in passive components such as MLCCs may cap near-term growth optionality.

  Comparison

  Along with Taiyo Yuden, it is one of the electronic components top picks that the report continues to recommend after 4Q earnings.

  Risks

  MLCC demand recovery falling short of expectations, price pressure, yen fluctuations, and end-demand volatility.

• Taiyo Yuden (6976.T)

  One of the top picks in the electronic components sector, rated OW.

  Strengths

  The MoM improvement in passive components production and the recovery in the electronic components sector should support fundamental improvement; covered price is ¥7,768.

  Weaknesses

  Weakness in passive components on a YoY basis remains the main near-term constraint.

  Comparison

  Named together with Murata Manufacturing as a top pick.

  Risks

  A slower-than-expected recovery in passive components demand, ASP declines, and an extended inventory adjustment cycle.

• Ibiden (4062.T)

  A potential beneficiary of the strong growth in ABF/FC-BGA rigid module substrates.

  Strengths

  Rigid module substrate production value rose 53% YoY and 12% MoM, and the report explicitly says this is positive for Ibiden.

  Weaknesses

  The report does not provide a specific rating, price, or target price update in this note.

  Comparison

  Compared with the passive components chain, ABF substrate data are stronger.

  Risks

  AI server demand volatility, changes in customer capex, and a reversal in the high-end substrate supply-demand cycle.

• Si MOSFET industry chain

  A semiconductor subsegment supported by expanding demand for low-voltage and medium-voltage products from AI servers.

  Strengths

  The report expects Si MOSFET production to continue strong YoY growth, and March already showed steady YoY growth.

  Weaknesses

  Overall discrete semiconductor value was only +2% YoY, with strength concentrated in selected categories.

  Comparison

  Compared with MCU's -18% YoY, the Si MOSFET trend is stronger.

  Risks

  AI server demand falling short of expectations, power-device price competition, and inventory-cycle changes.

Key data

• Overall electronic components productionSlightly above the seasonal average in March 2026The report says domestic production of electronic components trended slightly above the 20-year seasonal average.
• Passive components production value-9% YoY / +10% MoMDollar-denominated; MLCC was -14% YoY / +11% MoM.
• MLCC output and valueOutput +12% MoM, value +11% MoM, ASP -1% MoMThe report also notes that the stagnation in MLCC production that began in the second half of 2025 is still ongoing.
• Electronic substrates production value+27% YoY / +12% MoMElectronic substrates production was slightly above seasonality.
• Rigid module substrates production value+53% YoY / +12% MoMIncluding FC-BGA and ABF substrates, growth continued to be strong.
• Discrete semiconductors production value+2% YoY / +9% MoMWithin this, Si MOSFETs posted steady YoY growth.
• MCU production value-18% YoY / +4% MoMMCU remained weak on a YoY basis.
• Logic IC production value+1% YoY / +8% MoMMarch performance was close to seasonality.
• Memory production value+132% YoY / +18% MoMMemory production remained strong.
• Current price and rating for covered companiesMurata Manufacturing ¥6,180/OW; Taiyo Yuden ¥7,768/OWPrices as of the May 19, 2026 close.

Impact & implications

The implications for Japan's electronic components sector are mildly positive but clearly differentiated: AI-server-related ABF/FC-BGA substrates and the Si MOSFET chain are seeing strong momentum, and memory production is also robust; traditional passive components, especially MLCCs, are still under pressure on a YoY basis, indicating that the sector recovery is not uniform. On the investment side, the report continues to favor Murata Manufacturing and Taiyo Yuden, while the strength in ABF substrates is a positive signal for Ibiden.

Risks

• Continued YoY declines in MLCCs and other passive components may indicate insufficient recovery in end demand.
• METI monthly data are subject to seasonality and exchange-rate effects; YoY changes in dollar terms may be distorted by yen volatility.
• If AI server-related demand slows, growth expectations for ABF substrates and Si MOSFETs could be revised down.
• MCU production value remains at -18% YoY, showing that some semiconductor subsegments have still not recovered.
• The report includes disclosures related to market making, client relationships, and potential investment banking compensation involving J.P.Morgan and some covered companies; investors should use it with caution in light of the conflict disclosures.

What to watch

• Whether MLCC output, value, and ASP in subsequent METI monthly data will move from YoY declines to sustained recovery.
• Whether production value for ABF/FC-BGA rigid module substrates can continue to maintain strong YoY growth.
• Whether Si MOSFET output and value will continue the strong AI-server-driven YoY growth.
• Whether memory production can remain strong from a high base.
• Whether subsequent orders, inventory, and pricing trends at Murata Manufacturing and Taiyo Yuden support the OW ratings.