Yageo stands to benefit from a commodity MLCC price upcycle, and Goldman Sachs reiterates Buy while sharply raising its target price

Overview

This report focuses on how much Yageo (Yageo Corp., 2327.TW) can benefit from a new MLCC upcycle. Goldman Sachs believes AI server demand is pushing major Japanese and Korean MLCC suppliers to shift capacity toward AI-grade products, tightening commodity MLCC supply. As the leading contributor to commodity MLCC capacity, Yageo is expected to benefit from higher prices, margin expansion, and valuation re-rating.

Core views

The core view is that commodity MLCC may experience larger price increases than premium MLCC, because AI-grade MLCC already carries high margins and is mainly sold under large-customer contracts, while commodity MLCC is more sensitive to tighter supply-demand conditions. Yageo is estimated to hold roughly a 23% share of commodity MLCC capacity in 2026, and commodity MLCC is expected to account for about 72%/85%/90% of its MLCC revenue in 2026/27/28E, giving it greater earnings leverage than major Japan/Korea premium peers.

Analysis framework

The report analyzes from AI MLCC TAM expansion, recovery in non-AI MLCC demand, industry capacity migration, utilization recovery, Yageo commodity MLCC share, price elasticity, margin transmission, EPS upgrades and PB/ROE valuation framework, and compares Goldman Sachs forecasts with Bloomberg consensus expectations.

Methodology notes

• Valuation methodsPB/ROE

  Uses 2028E as the valuation base and applies a 26x PB/ROE multiple to derive the 12-month target price.

  Goldman Sachs shifted the valuation base from the previous 2H26-1H27E rolling basis to 2028E to reflect the longer visibility of this pricing cycle; the 26x PB/ROE multiple is close to historical peak levels and comparable to valuation levels of Japan/Korea MLCC suppliers.

• Industry demandTAM and CAGR analysis

  Assesses the supply-demand gap through AI and non-AI MLCC demand growth, per-server MLCC usage in AI servers, and industry capacity allocation.

  The report expects global MLCC TAM CAGR of 33% in 2025-28E, with AI MLCC TAM CAGR at 93%, and projects AI MLCC’s share of global MLCC TAM to rise from 6% in 2025 to 19% in 2028E.

• Earnings forecastEPS and margin adjustments

  Incorporates commodity MLCC price increases and improved order visibility into revenue, gross margin and EPS forecasts.

  Goldman Sachs raised 2026/27/28E revenue forecasts by 6%/26%/54%, raised EPS by 11%/49%/106%, and raised gross margin forecasts by 0.9/4.7/8.9 percentage points.

Asset mapping & comparison

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

• Yageo Corp. (2327.TW)

  Core coverage name; benefits from tightening commodity MLCC supply-demand conditions and price increases.

  Strengths

  Leading share of commodity MLCC capacity, broad product portfolio, distribution channels and utilization management capability, and an expanded lineup through acquisitions including Kemet, Chilisin, Telemecanique and Shibaura.

  Weaknesses

  AI server-related MLCC currently has a lower mix, and part of growth still depends on the commodity cycle, making earnings sensitive to industry inventories and end-demand.

  Comparison

  The report expects Yageo 2025-28E revenue CAGR of about 43%, above the combined estimate of about 14% for major Japan/Korea premium MLCC peers; OPM expansion also appears more pronounced.

  Risks

  OEM inventory build may lag expectations, IT end-demand may be softer, M&A integration may be slower than expected, and AI demand could weaken or pricing upside could be less durable than expected.

• Commodity MLCC

  The main source of Yageo’s earnings leverage.

  Strengths

  Supply is squeezed by AI-grade capacity migration; price sensitivity is higher to utilization improvements, giving larger room for hikes.

  Weaknesses

  Historically cyclical, with pricing durability dependent on inventory and end demand.

  Comparison

  The report believes commodity MLCC may see larger price increases than premium MLCC products.

  Risks

  If major suppliers add non-AI capacity again or terminal demand weakens, supply tightness may ease.

• AI-grade MLCC

  Demand-side variable that drives industry capacity migration and MLCC TAM expansion.

  Strengths

  Per-unit MLCC usage in AI servers is materially higher than in general-purpose servers, supporting a high-growth TAM.

  Weaknesses

  Mostly sold to large customers and under contract, so aggressive repricing room may be lower than for commodity products.

  Comparison

  AI MLCC TAM is expected to grow at 93% CAGR in 2025-28E, faster than total MLCC TAM.

  Risks

  If AI server shipments or per-server content growth fall short of expectations, capacity migration and commodity MLCC supply-tightening logic could weaken.

Key data

• RatingBuyGoldman Sachs reiterates its Buy rating.
• 12-month target priceNT$1,490Previous target price was NT$346.
• Current priceNT$1,045Price shown in the report.
• Expected upside42.6%Based on the target price and current price listed in the report.
• Commodity MLCC price forecast2026/27/28E y/y +29%/+93%/+84%Goldman Sachs expects Yageo commodity MLCC prices to accelerate from 2H26.
• Global non-AI MLCC utilization2027/28E at 97%/100%The report says this level is close to or above the prior peak in 2017/18.
• EPS upgrades2026/27/28E raised by 11%/49%/106%Reflects improved commodity MLCC pricing conditions and order visibility.
• Revenue forecastFor 2025/26E/27E/28E: NT$132,930.0mn/196,764.5mn/289,670.6mn/388,444.8mnFrom the report’s GS Forecast table.
• EPS forecastFor 2025/26E/27E/28E: NT$11.51/21.22/37.56/57.32From the report’s financial forecast.
• Operating margin forecastFor 2025/26E/27E/28E: 22.4%/27.3%/33.3%/37.8%The report says higher prices will directly improve overall profitability.

Impact & implications

If Goldman Sachs’ view on commodity MLCC price increases and AI-driven capacity migration proves correct, Yageo’s revenue growth, OPM expansion and ROE uplift are likely to outperform Japan/Korea premium MLCC peers, with the stock potentially driven by both earnings upgrades and valuation re-rating. However, the investment case is highly dependent on sustained AI server demand, non-AI inventory restocking, and the ability to execute price increases.

Risks

• OEM inventory build is weaker than expected.
• IT terminal demand is below expectation.
• Integration of Kemet, Chilisin, Telemecanique and Shibaura is slower than expected.
• Slowing AI server demand causes AI-grade MLCC capacity migration to underperform expectations.
• Commodity MLCC price hikes are executed less forcefully or for a shorter duration than Goldman Sachs expects.

What to watch

• Whether Yageo commodity MLCC prices accelerate as expected from 2H26.
• Whether global non-AI MLCC industry utilization recovers to 97%/100% in 2027/28E.
• Whether AI server shipments and per-server MLCC content can support the high-growth trajectory of AI MLCC TAM.
• Whether Yageo gross margin, OPM and ROE continue to expand as prices rise.
• Whether Bloomberg consensus revisions track the Goldman Sachs upgrades in revenue, margin and EPS.
• Whether major Japan and Korea MLCC suppliers continue to shift capacity to AI-grade applications.