AI server and auto demand lift the probability of tighter MLCC supply and demand; JPMorgan raises Murata Manufacturing and Taiyo Yuden to Overweight

Overview

This is a JPMorgan industry research report on the MLCC sector. Its core view is that demand from AI servers, vehicle electrification, and robotics is shifting the MLCC product mix toward larger-size, higher-capacity, and higher-quality products. Although consumer electronics demand remains under pressure, the report cuts its growth expectation for consumer-electronics-related demand from 6% year over year to 2%, but believes AI server and auto demand are sufficient to drive higher industry value, better capacity utilization, and an improved pricing environment.

Core views

The report's core views are as follows: first, demand for MLCCs used in AI servers has been rising since mid-2024 and may materially improve overall supply-demand balance starting in mid-2026; second, industry capacity utilization has already reached 87%-88%, close to the 90% tightness threshold; third, side-gap structure and large-capacity MLCCs for AI servers consume more capacity in clean rooms, lamination, printing, and firing, and although they account for only about 5% of value, they may consume 1.5-2 times that share of capacity; fourth, if major manufacturers stop cutting prices to the most powerful high-end smartphone customers, they will be better able to resist pricing pressure from other customers; fifth, Japanese MLCC manufacturers are not expensive on valuation, and Murata Manufacturing and Taiyo Yuden are the preferred names in Japan's electronic components sector.

Analysis framework

The report uses a top-down industry model, end-market demand breakdown, capacity utilization tracking, price-cycle review, and peer valuation comparison to assess the MLCC cycle. On the demand side, it focuses on AI servers, general-purpose servers, autos, robotics, and consumer electronics; on the supply side, it focuses on high-end MLCC capacity utilization, the production complexity of side-gap structure products, and first-tier manufacturers' order-taking strategies; on the investment side, it combines peak valuation multiples from the 2017-2018 and 2020-2021 MLCC cycles to adjust ratings and target prices for Murata Manufacturing, Taiyo Yuden, and TDK.

Methodology notes

• industry_modelTop-down MLCC industry model

  Derive industry shipments and revenue from end-market demand, unit usage, ASP, and product-mix changes.

  The report expects industry shipments to reach 6.1 trillion units by 2030E and revenue TAM to reach $25 billion, and it believes unit growth, ASP growth, and revenue growth in 2025E-2030E will be approximately 6%, 4%, and 11%, respectively.

• cycle_analysisCapacity utilization and price-cycle analysis

  Use capacity utilization near the 90% threshold to judge whether supply and demand are tightening, and watch whether price declines slow or stabilize.

  The report notes that industry capacity utilization has risen to 87%-88% since mid-2025, close to the tightness threshold; if AI server demand persists, price declines may slow in the second half of 2026 and prices may stabilize in FY2027.

• Valuation methodsPeer valuation and peak-cycle multiple comparison

  Assess upside for MLCC suppliers by combining FTM P/B, historical averages, and peak-cycle multiples.

  Major MLCC suppliers are up 18% year to date in 2026, with an average FTM P/B of about 2.1x, above the five-year average of 1.55x; the report still believes product-mix improvement and a more favorable pricing environment can support share prices.

Asset mapping & comparison

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

• Murata Manufacturing (6981.T)

  A core Japanese MLCC supplier; rating upgraded from Neutral to Overweight.

  Strengths

  Benefits from growth in AI server MLCC demand, price stability, and advantages in high-end capacity; if price stability lasts through FY2028, the report believes operating profit could rise to JPY 800 billion.

  Weaknesses

  In the traditional MLCC business, prices typically decline slightly more than 5% per year, and price declines would drag operating profit down by about JPY 90 billion.

  Comparison

  Short term, it benefits more directly than TDK from tighter MLCC supply and demand and is one of the preferred names in Japan's components sector.

  Risks

  If the AI server demand cycle is shorter than expected, supply and demand do not tighten, or prices keep falling, earnings leverage may be below expectations.

• Taiyo Yuden (6976.T)

  A Japanese MLCC supplier; rating upgraded from Neutral to Overweight.

  Strengths

  Has clear earnings leverage during periods of stable MLCC prices and tight supply and demand; if price stability lasts through FY2028, the report believes operating profit could rise to JPY 100 billion.

  Weaknesses

  When prices decline by slightly more than 5% per year, operating profit would be dragged down by more than JPY 20 billion.

  Comparison

  In the short term, it is, along with Murata Manufacturing, one of the report's most preferred Japanese MLCC names.

  Risks

  High dependence on the MLCC cycle and price stability; if AI server demand falls short, valuation re-rating may be limited.

• TDK (6762.T)

  One of Asia's major MLCC suppliers; Overweight maintained and target price raised.

  Strengths

  In addition to improvement in passive components, profit growth from charging batteries, HDD-related products, and sensors can support medium- to long-term performance.

  Weaknesses

  Near-term share price may be affected by weak demand for charging batteries used in Chinese smartphones and notebooks, as well as a cautious FY2026 guide.

  Comparison

  In the short term, the report prefers Murata Manufacturing and Taiyo Yuden; over the longer term, it prefers TDK's business-mix improvement.

  Risks

  Weak battery demand, conservative management guidance, or slower-than-expected improvement in passive components.

• Samsung Electro-Mechanics (009150.KS)

  A major Korean MLCC supplier, rated Overweight in the report.

  Strengths

  As one of Asia's leading MLCC suppliers, it stands to benefit from an improving industry pricing environment.

  Weaknesses

  The report prefers Japanese MLCC manufacturers more because their valuations are less demanding.

  Comparison

  Relative to Murata Manufacturing, Taiyo Yuden, and TDK, the report has a lower preference for Korean MLCC manufacturers.

  Risks

  Valuation attractiveness, product mix, and regional demand differences may affect relative performance.

• MLCC industry

  An electronic components industry driven by demand from AI servers, autos, and robotics.

  Strengths

  High-end applications bring higher ASPs, higher quality requirements, and stronger capacity consumption, supporting tighter supply-demand conditions and margin improvement.

  Weaknesses

  Consumer electronics demand remains a headwind, and the report has lowered the growth outlook for related demand.

  Comparison

  Compared with prior cycles dominated by smartphones and consumer electronics, this cycle is more strongly driven by AI servers and vehicle electrification.

  Risks

  A slowdown in AI server demand, customer price pressure, overly rapid capacity expansion, and continued weakness in consumer electronics demand.

Key data

• 2030E MLCC industry shipments6.1 trillion unitsThe report expects shipments to exceed 4.6 trillion units this year, implying a roughly 6% CAGR through 2030E.
• 2030E MLCC market TAM$25 billionExpected to grow at roughly 11% CAGR over the next five years, supported by a higher share of high-end applications and ASP improvement.
• Demand for MLCCs used in AI serversJust above JPY 100 billion, or about $700 million, in 2025Accounts for about 5% of overall MLCC demand and is expected to grow about 50%-60% annually in 2026-2027.
• MLCC capacity utilization87%-88%The level since mid-2025, close to the 90% tight-supply threshold.
• MLCC usage per GPURising from about 4k to 12kThe report expects roughly a threefold increase over the next five years, reflecting higher compute and power requirements.
• AI server share of the MLCC marketRising from 1.1% in 2025 to about 4% in 2030EThe report expects about a fourfold increase over the next five years.
• Potential demand for robotics-related MLCCsMore than 100 billion units in 2030EThe report assumes current MLCC usage per robot is about 10k, below the roughly 14k used in standard EVs, but sees high long-term potential.
• Year-to-date return for major MLCC suppliers in 202618%Compared with 4% for MXAP over the same period.
• Average valuation for major MLCC suppliers2.1x FTM P/BAbove the five-year historical average of 1.55x, based on Bloomberg consensus estimates as of 2026-04-02.

Impact & implications

The investment implication is that the MLCC industry is shifting from a consumer-electronics drag to a product-mix upgrade cycle driven by AI servers, autos, and robotics. If tight supply and demand continue for high-end MLCCs, manufacturers may gain stronger pricing discipline and earnings leverage; Japanese manufacturers are favored because of relatively reasonable valuations, stable customer relationships, and advantages in high-end capacity. In the near term, Murata Manufacturing and Taiyo Yuden are the most direct beneficiaries of tighter MLCC supply and demand; over the longer term, TDK also has room for mix improvement from charging batteries, HDD-related products, and sensors.

Risks

• Demand for MLCCs used in AI servers grows less than expected, preventing industry capacity utilization from breaking through the tightness threshold.
• Consumer electronics demand worsens further, offsetting growth from AI servers and autos.
• Major customers continue to demand price cuts, preventing the price-stability assumption from materializing.
• High-end MLCC capacity expands or competition intensifies faster than expected, weakening supply tightness and ASP improvement.
• TDK faces the risk of weak demand for charging batteries used in Chinese smartphones and notebooks, as well as conservative FY2026 guidance from management.
• The report involves potential conflicts of interest from investment banking activities, and investors should treat this as one factor in decision-making rather than the sole basis.

What to watch

• Whether AI server MLCC order growth and price declines slow materially after mid-2026.
• Whether industry capacity utilization rises further from 87%-88% to 90% or above.
• FY2026 guidance, order visibility, and pricing strategy from Murata Manufacturing, Taiyo Yuden, and TDK.
• The impact of the Nvidia GB300 and Vera Rubin platform transitions on MLCC usage and internal capacity demand.
• Whether high-end smartphone customers accept price stability or smaller price cuts.
• Whether vehicle electrification, robotics, and GP server demand continue to increase the share of large-size MLCCs.