According to a report from Economic Daily News, the AI boom has significantly increased the use of passive components, particularly in AI PCs and AI servers. Murata, a Japanese giant in multilayer ceramic capacitors (MLCC), is optimistic about the market outlook, stating that AI is driving waves of MLCC demand.

As per a report from Nikkei, Murata President Norio Nakajima revealed in an interview that the AI trend is unstoppable, leading to an expansion in MLCC applications.

This expansion reportedly starts with smartphones and extends to edge AI in computers equipped with generative AI functions. The end-use of these devices will drive an increase in MLCC consumption, and the demand for components in AI servers is also ramping up.

Murata’s views on the passive component market are referable, as in the first half of this year, Murata was ahead of the industry in announcing a recovery in component shipments for the smartphone market and an increase in capacity utilization at its MLCC plants.

Norio Nakajima pointed out that as demand surges, the capacity utilization rate of Murata’s MLCC plants has been continuously increasing to meet end-user demand. Last quarter, the capacity utilization rate was approximately 80% to 85%, and this quarter it is expected to rise to 85% to 90%.

Following Murata, Taiwanese companies such as Yageo and Walsin Technology also saw a recovery in their operations, marking the beginning of a bullish phase for the passive component market.

Industry sources cited by Economic Daily News further explain that Murata’s optimistic outlook is well-founded. The average MLCC usage per AI PC has surged by about 80% compared to traditional PCs, while the usage in AI servers has more than doubled, with each server requiring an average of 3,000 to 4,000 MLCCs.

In high-speed computing environments, this will further drive the demand for high-capacity and high-voltage MLCCs. Meanwhile, Yageo and Walsin Technology are actively seizing the business opportunities brought by AI.

Yageo Chairman Pierre Chen once stated that at this stage, the group not only provides MLCCs and chip resistors for AI applications but also inductors and magnetic components.

These offerings include both standard and niche products, and the company can also provide customized product combinations according to customers’ requirements for high-temperature and high-current tolerance.

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• [News] Global Passive Component Giants to Raise Prices by 20%, Benefiting Taiwanese Supply Chain
• Passive Component Industry Nearing Bottom, Embracing AI and Automotive

(Photo credit: Murata)

According to a report from Economic Daily News, benefiting from the upcoming peak season for smartphones, a recovery in the PC market, and a more than 30% surge in silver prices this year, global giants such as Murata and TDK are planning to raise product prices. Targeted products include multilayer inductors and beads, with potential price hikes of up to 20%, marking a rare significant increase in the passive component industry in recent years.

Industry sources cited by the same report have noted that the passive components sector, after undergoing inventory adjustments for over one year, is now seeing inventory levels returning to healthy levels. This, coupled with customers replenishing stocks, the traditional peak season approaching, and significant cost increases, presents an opportunity for rare price hikes in products such as multilayer inductors and ferrite beads.

Industry sources cited by the report also highlight that silver accounts for up to 60% of the cost in manufacturing multilayer inductors and beads. With silver prices having surged nearly 40% at one point this year and still up 35% year-to-date despite a recent slight pullback, manufacturers are facing substantial cost pressures in mass-producing these components.

Leading global inductor manufacturers include Japanese companies like Murata, TDK, and Taiyo Yuden, as well as Taiwan’s Yageo and Walsin Technology groups. With major smartphone manufacturers launching new models in the second half of the year, the recovering PC market, and rising silver prices, industry sources indicate that top-tier companies like Murata and TDK may increase prices for multilayer inductors and beads. Large-size products are expected to see the first price hikes, ranging from 10% to 20%.

Industry sources further explain that multilayer inductors are characterized by magnetic shielding, which eliminates electromagnetic interference and effectively suppresses high-frequency oscillations in circuits. This makes them highly suitable for high-density circuit designs. Depending on their size, these inductors are widely used in consumer electronics and even servers.

On the other hand, ferrite beads are designed using ferrite materials and a multilayer manufacturing process. Their impedance varies with frequency, meaning they achieve high impedance at high frequencies, offering superior high-frequency filtering characteristics. This effectively suppresses noise interference, making them suitable for end products like smartphones, tablets, laptops, and power supplies.

Reportedly, the operations of passive component manufacturers have been gradually recovering. Leading passive component manufacturer Yageo is optimistic, noting that customer inventory levels are becoming healthier this quarter. The company expects its capacity utilization rate to continue increasing and holds an optimistic outlook for the market moving forward.

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• Passive Component Industry Nearing Bottom, Embracing AI and Automotive

(Photo credit: YAGEO)

China’s Automotive Price War Rages On: Some automakers have been gradually reclaiming outsourced orders for the battery, motor, electronic control system since May and June, shifting towards in-house production. Recently, they have asked suppliers to requote for second-half orders, with Samsung, Murata, Taiyo Yuden, PSA and Yageo actively vying for contracts.

Due to the more stringent certifications in the automakers’ supply chain compared to tier 1 suppliers, the majority of battery, motor, electronic control system MLCC suppliers still come from Taiwan, Japan, and Korea. Among them, Korean manufacturer Samsung has made significant progress in the Chinese automotive market this year. They have been actively providing sample for certifications and competitive pricing, securing a large share of orders and displacing Japanese manufacturers Murata and TDK, who had long held the lead.

Ongoing negotiations between automakers are expected to conclude with finalized orders by the end of August. According to the channel check from TrendForce, it appears that Samsung will maintain its leading position with a low-price strategy, while Murata, unwilling to be drawn into a price war reminiscent of consumer electronics, will remain conservative with pricing to secure a substantial market share. Taiyo Yuden, PSA and Yageo, though limited in automotive product offerings, have been proactive in their bidding efforts and have secured several orders.

(Photo credit: Yageo)