Yageo is in an AI-amplified upcycle for passive components, and Nomura maintains Buy while sharply raising the target price

Overview

This report is Nomura's company research on YAGEO Corporation. The core view is that the current upcycle in passive components is still at an early stage and may last longer than the 2017-18 cycle under AI-driven demand. The report maintains a Buy rating and raises the target price from TWD415 to TWD1,350.

Core views

The report argues that the rapid iteration of AI chips and AI server platforms is significantly increasing usage of MLCCs and tantalum capacitors. As high-capacitance MLCC capacity at Murata and SEMCO is absorbed by AI demand, demand from non-AI applications may spill over to Greater China manufacturers such as Yageo. As the world's largest supplier of R-chips and tantalum capacitors and the third-largest supplier of MLCCs and inductors, Yageo has an opportunity to leverage its broader product portfolio for bundle sales and improve pricing power amid structural supply-demand tightness.

Analysis framework

The analytical framework combines cycle comparison, supply-demand checks, product content increases, gross margin expansion paths, and valuation re-rating. The report compares the current cycle with the 2017-18 passive component upcycle and uses AI chip revenue growth, platform upgrade speed, industry capacity allocation, and Yageo's historical valuation range to support earnings and target price increases.

Methodology notes

• Valuation methodsP/E multiple valuation

  P/E valuation

  The target price of TWD1,350 is based on 30x 2028F EPS of TWD45.0; 30x is toward the high end of Yageo's historical P/E range of 8-40x since 2018, reflecting AI-driven business upside and a more favorable pricing environment.

• cycle_analysisupcycle comparison

  Upcycle comparison

  Referring to the 2017-18 cycle, the report believes the share price may peak about one quarter ahead of the gross margin peak; Yageo's gross margin is still in the early stage of expansion.

• supply_demandindustry checks

  Industry supply-demand checks

  Based on industry checks, the report judges that NVIDIA VR200's MLCC usage may be more than 3x that of GB300, and believes that capacity crowding at Murata and SEMCO will lead to demand spillover.

Asset mapping & comparison

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

• YAGEO Corporation (2327.TW)

  Covered company in the report, with Buy maintained.

  Strengths

  The world's largest supplier of R-chips and tantalum capacitors, and the third-largest supplier of MLCCs and inductors; its broad product line can strengthen pricing power through bundled sales of MLCCs, tantalum capacitors, and R-chips.

  Weaknesses

  Its current portfolio is described as skewed toward the lower end, and it is not a direct MLCC supplier for NVIDIA VR200.

  Comparison

  Compared with Murata and SEMCO, Yageo is more likely to benefit through demand spillover and a richer product mix rather than directly capturing the highest-end AI MLCC demand.

  Risks

  Inventory correction, ASP pressure, failure to pass through raw material costs, intensified competition, and higher-than-expected expenses in the new sensor business.

• Murata (6981 JP)

  One of the direct beneficiaries of AI high-capacitance MLCC demand and a key upstream reference point for supply-demand crowding.

  Strengths

  Strong demand and capacity allocation advantages in AI high-capacitance MLCCs.

  Weaknesses

  Capacity absorbed by AI demand may squeeze supply for non-AI applications.

  Comparison

  After its capacity is absorbed by AI demand, demand from non-AI applications may spill over to Yageo.

  Risks

  The report does not elaborate on its stock-specific risks in detail.

• SEMCO (009150 KS)

  One of the direct beneficiaries of AI high-capacitance MLCC demand and a key upstream reference point for supply-demand crowding.

  Strengths

  Strong demand for AI high-capacitance MLCCs.

  Weaknesses

  Capacity allocation toward AI may reduce supply for non-AI applications.

  Comparison

  Similar to Murata, its tight capacity may create demand spillover opportunities for Yageo.

  Risks

  The report does not elaborate on its stock-specific risks in detail.

• NVIDIA (NVDA US)

  A demand driver for AI platforms; the report mentions that VR200's MLCC content may be more than 3x that of GB300.

  Strengths

  Rapid AI platform iteration is driving higher passive component content.

  Weaknesses

  Yageo is not a direct MLCC supplier for its VR200.

  Comparison

  NVIDIA's expanding MLCC demand benefits Yageo indirectly through industry capacity crowding.

  Risks

  If AI platform demand or upgrade cadence falls short of expectations, industry supply-demand tightness may ease.

• AWS Trainium 3

  A demand driver for tantalum capacitors; the report expects its tantalum capacitor usage to be higher than the previous generation.

  Strengths

  Higher tantalum capacitor usage may benefit global leading suppliers such as Yageo.

  Weaknesses

  The report does not disclose specific supply share.

  Comparison

  Compared with MLCCs, tantalum capacitors are a more direct fit with Yageo's global leading product position.

  Risks

  If platform adoption pace or bill-of-materials configuration falls short of expectations, demand contribution may be lower than expected.

Key data

• RatingBuyBuy rating maintained.
• Target priceTWD 1,350.00Raised from TWD415, based on 30x 2028F EPS.
• Closing priceTWD 1,140.00The report lists the date as July 1, 2026.
• Implied upside+18.4%Calculated based on the target price and closing price.
• New 2026F/2027F/2028F EPS forecastsTWD20.9 / TWD33.2 / TWD45.0Raised from the previous TWD18.7 / TWD24.4 / TWD29.2.
• 2028F revenueTWD301,989mnThe table shows the 2028F revenue forecast.
• 2028F reported net profitTWD92,414mnThe table shows the 2028F net profit forecast.
• 2025 to 2028F gross margin36.2% to 48.3%The report expects gross margin expansion, though still below the 2018 peak of 63.3%.
• Current valuation34x 2027F EPSThe report text shows the current trading multiple.
• Market capitalizationUSD74,122.5mnShown in the summary table on the report cover page.
• 3-month average daily turnoverUSD995.6mnShown in the report's performance data.

Impact & implications

If AI server platforms continue to boost demand for high-capacitance MLCCs and tantalum capacitors, Yageo may benefit from an improved product mix, rising ASPs, and gross margin expansion. On valuation, Nomura has raised the target multiple to the high end of the historical range, implying the market is assigning a higher premium to the sustainability of the AI-driven cycle and improved pricing power.

Risks

• Inventory correction lasting longer than expected may lead to lower UTR and pressure ASP.
• Failure to pass through high raw material costs under the high-inflation backdrop of 2021.
• Intensified competition from suppliers in Greater China.
• Higher-than-expected OPEX in the new sensor business.
• If AI demand, platform upgrade speed, or increases in passive component content fall short of expectations, the logic of supply-demand imbalance and price increases may weaken.

What to watch

• Whether the industry supply-demand imbalance in 2027-28F worsens further and benefits Yageo's pricing.
• Whether Yageo's gross margin expands from 36.2% in 2025 to 48.3% in 2028F as projected in the report.
• Whether demand for high-capacitance MLCCs continues to crowd out Murata and SEMCO capacity and leads to spillover demand from non-AI applications.
• Whether NVIDIA's new platforms and AWS Trainium 3 deliver on higher MLCC and tantalum capacitor content.
• Whether Yageo can improve product mix and profitability through bundled sales of MLCCs, tantalum capacitors, and R-chips.