Goldman Sachs: AI-Driven MLCC Volume and Price Growth; Maintains Buy Ratings on Three Japanese Market Leaders

Overview

This report analyzes the latest trends in the multilayer ceramic capacitor (MLCC) industry based on April trade statistics released by Japan’s Ministry of Finance (MOF). Data show MLCC exports exhibiting 'simultaneous volume and price growth,' corroborating robust order conditions among Japanese manufacturers. Goldman Sachs maintains Buy ratings on Murata Manufacturing Co., Ltd., Taiyo Yuden Co., Ltd., and TDK Corporation, and views the AI-driven MLCC industry cycle as being in its early stage—poised to become the largest and longest-lasting supercycle in history.

Core views

Demand-side and industry trends: In April, MLCC export average selling price (ASP) rose 3% MoM, export volume rose 7% MoM, and export value rose 9% MoM. On a YoY basis, ASP, volume, and export value increased sharply by 16%, 10%, and 28%, respectively. These figures align with recent strong order results reported by Japanese MLCC manufacturers, indicating continued upward momentum in industry health. AI-driven structural opportunity: Around GPUs/ASICs in AI servers, space-constrained PCBs drive low-voltage, high-capacitance MLCCs toward both miniaturization and higher capacitance—raising technical barriers. Murata Manufacturing, Samsung Electro-Mechanics (SEMCO), and Taiyo Yuden are the three leading suppliers in this segment and are expected to fully benefit from expanding demand. Moreover, each technology iteration effectively resets pricing (functioning as de facto price increases), enabling these vendors to sustain strong pricing power. Stock-specific differentiation logic: TDK currently lacks the technology required to enter the low-voltage, high-capacitance MLCC market for GPUs/ASICs (awaiting material development through collaboration with Nippon Chemical Industry), but experiences strong demand for its high-voltage, high-capacitance MLCCs used in power circuits. This product line shares technological overlap with automotive applications (e.g., EVs), and is expected to boost TDK’s factory utilization rates.

Analysis framework

Macroeconomic data validating micro-level health: The firm first cites official MOF trade statistics to cross-validate upstream industry health via dual growth in export ASP and export volume—avoiding limitations of relying solely on individual company earnings reports. Technology pathway and competitive landscape analysis: Deeply dissects AI server-specific MLCC technical requirements (low voltage, high capacitance, miniaturization) to delineate competitive tiers. Highlights that only vendors with specific technical capabilities (Murata, Taiyo Yuden) can capture AI core growth, while vendors pursuing different technology pathways (TDK) achieve improved capacity utilization through other high-growth areas (e.g., power circuits, automotive electronics). Valuation and premium logic: Applies a combined valuation framework of EV/GCI (Enterprise Value / Gross Cash Income) and CROCI/WACC (Cash Return on Invested Capital vs. Weighted Average Cost of Capital spread). Assigns varying sector valuation premiums based on differences in technical barriers and market positioning (Murata: 50%; Taiyo Yuden: 30%; TDK: 10%), thereby deriving target prices.

Methodology notes

• Industry/sector analysis frameworkVolume-price decomposition

  Volume-price decomposition

  Decomposes industry total revenue growth into two dimensions: 'volume change' and 'price change.' In this report, simultaneous MoM growth in MLCC export volume and average price indicates a healthy expansion phase driven by balanced supply-demand dynamics—not inflation-driven price hikes or inventory liquidation.

• Valuation methodologyEV/EBITDA valuation

  EV/GCI vs CROCI/WACC

  A relative valuation method integrating profitability quality and capital efficiency. GCI (Gross Cash Income) approximates gross margin cash flow; CROCI measures capital return efficiency. The report determines a company’s premium relative to the sector’s average multiple by comparing its CROCI–WACC spread—the larger the spread, the higher the justified valuation multiple.

• Competition and strategy frameworkMoat / competitive advantage

  De facto price increases driven by technology iteration

  In the electronic components industry, new products introduced at advanced technology nodes (e.g., smaller size, higher capacitance) typically command higher pricing power. The report identifies such re-pricing due to technological upgrades as an effective pricing moat, offsetting traditional commoditization-driven price pressure.

Asset mapping & comparison

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

• Murata Mfg. (6981.T)

  Core supplier of low-voltage, high-capacitance MLCCs for AI servers; technology leader

  Strengths

  Dominant position in GPU/ASIC-adjacent MLCC markets; enjoys pricing power from technology iteration

  Comparison

  Commands the highest valuation premium among peers (50%)

  Risks

  Declining smartphone production, deteriorating MLCC supply-demand balance, JPY appreciation

• Taiyo Yuden (6976.T)

  One of the three key suppliers of low-voltage, high-capacitance MLCCs for AI servers

  Strengths

  Benefits from AI-driven demand expansion; technical capabilities meet stringent requirements

  Comparison

  30% valuation premium, positioned between Murata and TDK

  Risks

  Weaker-than-expected smartphone demand, deteriorating MLCC supply-demand balance, JPY appreciation

• TDK (6762.T)

  Supplier of high-voltage, high-capacitance MLCCs; benefits from power circuit and automotive electronics demand

  Strengths

  Strong orders for power-circuit MLCCs; technology overlaps with EV applications, boosting factory utilization

  Weaknesses

  Lacks current capability for GPU/ASIC low-voltage, high-capacitance MLCCs

  Comparison

  10% valuation premium, emphasizing stable growth and utilization recovery

  Risks

  Declining smartphone production, rising input costs, JPY appreciation

Key data

• April MLCC Export ASP MoM+3%Indicates recovering pricing power
• April MLCC Export Volume MoM+7%Reflects strong downstream demand
• April MLCC Export Value MoM+9%Driven by simultaneous volume and price growth
• April MLCC Export ASP YoY+16%Sustained high-growth trend
• Murata Manufacturing Target Price¥5,400Implies FY3/27E P/E of 23x
• Taiyo Yuden Target Price¥7,100Implies FY3/28E P/E of 22x
• TDK Target Price¥3,000Implies FY3/27E P/E of 24x

Impact & implications

The report contends that the current MLCC industry dynamic is not merely a cyclical rebound, but rather the onset of a structural, long-duration cycle driven by AI infrastructure investment. For investors, this implies higher visibility and sustainability in earnings growth for leading companies. Murata and Taiyo Yuden—directly embedded in the AI core compute chip supply chain—offer greater upside sensitivity; TDK provides defensive characteristics and capacity utilization recovery via stable growth in power management and automotive electronics. Overall, Japan’s electronic components sector further solidifies its position within the global AI hardware supply chain.

Risks

• Decline in smartphone production or demand
• Deterioration in MLCC supply-demand balance
• JPY appreciation eroding export competitiveness
• Rising input material costs

What to watch

• Volume and price trends for MLCCs in subsequent MOF trade data releases
• Actual procurement ramp-up of low-voltage, high-capacitance MLCCs for AI servers
• Progress on material development collaboration between TDK and Nippon Chemical Industry