MLCC Market Forecast Raised; AI Drives Demand Expansion

Overview

This is a monthly tracking report by Morgan Stanley on the Japanese electronic components industry. The core content analyzes and forecasts the global MLCC (multilayer ceramic chip capacitor) market based on April capacitor production data released by Japan's Ministry of Economy, Trade and Industry (METI) and trade statistics from the Ministry of Finance (MOF). The report's key conclusion is that demand from AI/data centers for high-end MLCCs will drive sustained market growth; accordingly, Morgan Stanley has significantly raised its global MLCC shipment value forecasts for 2026-2028. The report also highlights Murata Manufacturing's competitive advantages in the high-end segment and tracks monthly sales of Taiwanese manufacturers.

Core views

**Demand Side: AI/Data Centers Drive Expansion in High-End Product Demand** The report argues that demand for small, high-capacity MLCCs used in AI/data centers will continue to expand. The launch of next-generation GPUs, constrained by space limitations in ABF substrates for chips and AI accelerator cards, requires large volumes of high-capacity MLCCs. This is not a cyclical recovery in traditional electronics but rather structural incremental demand driven by AI computing investment. **Supply Side & Competitive Landscape: Murata Holds Clear Leadership** The report notes that in the high-end MLCC segment, Murata Manufacturing is the leader in miniaturization and high capacity. Its products exhibit minimal effective capacitance change under applied DC voltage and maintain stable capacitance characteristics in high-frequency switching circuits. The report believes these attributes enable Murata to command a price premium, resulting in margins significantly above peers. While ASPs for comparable specs are expected to decline modestly, Murata will grow sales through differentiated, high-value-added products. **Data Validation & Forecast Revisions** Japan's April MLCC data showed divergence: METI-reported domestic production value (in USD terms) fell 10.4% YoY, while MOF-reported export value (in USD terms) rose 16.0% YoY. The report does not explicitly explain this discrepancy but places greater weight on trade data reflecting actual exports. Based on strong demand prospects, the report substantially raised global MLCC market forecasts: 2026 from USD 16.48 billion (+12.4%) to USD 17.43 billion (+18.8%); 2027 from USD 18.34 billion (+11.2%) to USD 20.89 billion (+19.9%); 2028 from USD 20.30 billion (+10.7%) to USD 24.25 billion (+16.1%). **Supply Chain Tracking: Taiwanese Manufacturers' Revenue Growth** The report also mentions monthly sales of Taiwanese MLCC makers: Yageo (covered by Howard Kao) posted May revenue of USD 477.7 million, +41.3% YoY and +7.7% MoM; Walsin (not covered) reported May revenue of TWD 3.70 billion, +16.5% YoY and -0.1% MoM. These figures corroborate robust industry demand.

Analysis framework

The report employs a combined top-down and bottom-up analytical approach. First, it tracks short-term industry sentiment via official Japanese industrial data (METI production and MOF trade statistics). Second, centered on AI/data centers as the core driver, it reverse-engineers upstream MLCC volume and specification requirements from end-application demand, focusing on the 'small, high-capacity' product upgrade trend. Building on this, it further analyzes key suppliers' (especially Murata's) technological advantages and competitive positioning to form judgments on overall industry volume and structural shifts. Finally, it validates regional industry conditions by tracking Taiwanese competitors' monthly revenue data.

Methodology notes

• Industry/Sector Analysis FrameworkSupply-demand framework

  Supply-Demand Framework

  The report analyzes MLCCs from two dimensions: supply (Japanese manufacturers' output) and demand (downstream shipments including AI/data centers and consumer electronics). By tracking supply-side data (e.g., Japan's April production value) and observing demand-side trends (e.g., server/PC shipments and AI demand), it assesses market supply-demand balance and pricing direction. In this report, supply data diverged (production value down but export value up), while AI-driven demand served as the primary basis for raising forecasts.

• Industry/Sector Analysis FrameworkVolume-price decomposition

  Volume-Price Decomposition

  The report decomposes the MLCC market size into two drivers: 'shipment volume' and 'average selling price (ASP).' When forecasting global shipment value, it provides both volume (billion pcs) and ASP (cents) projections along with respective YoY changes. It observes that rising export ASPs stem primarily from 'product mix improvement' (i.e., higher share of high-value-added products) rather than price hikes for identical specs, helping readers understand differing profit drivers across companies.

• Industry/Sector Analysis FrameworkPenetration S-curve

  Penetration S-Curve

  The report implicitly applies S-curve penetration logic, treating AI/data centers as a new application scenario. With explosive growth in AI computing demand, MLCC penetration in this segment is rapidly advancing from early adoption to a high-growth phase, explaining why the report views this demand as structurally expansive over the long term rather than a one-off event.

• Competition & Strategy FrameworkMoat / competitive advantage

  Moat/Competitive Advantage

  The report details Murata's 'moat,' namely its technological edge: leadership in miniaturization and high capacity, plus unique performance in DC bias characteristics and high-frequency stability. These technical barriers allow Murata to command premiums and widen gaps versus competitors (e.g., Taiyo Yuden, TDK, Yageo) in both margins and customer stickiness.

Asset mapping & comparison

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

• Murata Manufacturing (6981.T)

  Considered the biggest beneficiary of this round of AI-driven MLCC demand expansion.

  Strengths

  The report highlights Murata as the leader in miniaturization and high capacity; its MLCCs show minimal effective capacitance change under DC voltage and maintain stable capacitance during high-frequency operation. These technological strengths enable it to charge customers a premium.

  Weaknesses

  The report does not explicitly elaborate on its weaknesses.

  Comparison

  The report believes that compared to other MLCC companies, Murata will widen its profit gap more distinctly through differentiated, high-value-added products.

  Risks

  The report flags that a key risk is Murata's inability to ramp capacity quickly enough to meet surging demand in AI servers/data centers, potentially sacrificing MLCC capacity for other applications to ensure supply, thereby losing market share. However, the report believes it can increase production as needed.

Key data

• Global MLCC Shipment Value Forecast (2026)USD 17.43 billionPreviously USD 16.48 billion; YoY growth revised up from +12.4% to +18.8%
• Global MLCC Shipment Value Forecast (2027)USD 20.89 billionPreviously USD 18.34 billion; YoY growth revised up from +11.2% to +19.9%
• Global MLCC Shipment Value Forecast (2028)USD 24.25 billionPreviously USD 20.30 billion; YoY growth revised up from +10.7% to +16.1%
• April Japan MLCC Export Value (USD)USD 466.23 million+16.0% YoY, +9.1% MoM (Source: MOF Trade Statistics)
• April Japan MLCC Export ASP (USD)0.501 cents+5.0% YoY, +2.4% MoM (Source: MOF Trade Statistics)
• April Japan MLCC Domestic Production Value (USD)USD 445.5 million-10.4% YoY, +11.8% MoM (Source: METI Production Statistics)
• Yageo May RevenueUSD 477.7 million+41.3% YoY, +7.7% MoM
• Walsin May RevenueTWD 3.70 billion+16.5% YoY, -0.1% MoM

Impact & implications

Impact on the Industry: AI and data centers will become the core growth engine for the MLCC industry over the coming years, shifting the sector from cyclical fluctuations to structural growth. High-end 'small, high-capacity' products will replace standard commodities as the primary driver of value growth. This implies that leading companies capable of supplying high-value-added products (such as Murata) will gain greater market share and margin advantages, while firms with highly commoditized offerings may face persistent margin pressure.

Risks

• Divergence between MLCC production data (domestic output value) and trade data (export value); the true cause behind the downward indicator (declining production value) remains unclear, possibly signaling hidden risks in global demand.
• Companies tied to high-performance MLCCs face capacity catch-up risks; failure to expand capacity rapidly to meet explosive demand in AI/servers could result in market share losses amid intense competition.

What to watch

• Subsequent monthly MLCC production and trade data from Japan's METI and MOF to verify whether trends in production value and export value converge.
• Actual progress in downstream AI/data center segments (e.g., server shipments, GPU refresh cycles) to validate the demand expansion thesis.