Small Parts, Big Cycle: Passive Components
A few notes below on (1) MLCCs and (2) Silicon Capacitors today.
In particular, pleasantly surprised to learn today that silicon capacitators are levered to TPUs.
As always, thank you to those who flagged these to me.
MLCCs
MLCCs continue to be a US investor favourite.
A few notes out this week circling around the idea that the AI server is creating a structural, multi-year boom in high-end MLCCs.
GS put it most bluntly: they think this AI-driven MLCC cycle "will be the largest and longest in history," and that we're "still in the early stages."
Their note of a sell-side meeting with Murata Manufacturing held on 27 May:
1. Murata previously assumed AI infrastructure investment would peak around 2028, now sees possibility it extends to around 2030, partly because power shortages stretch the build-out timeline. On top of that, management flagged “edge AI” devices — autonomous driving/software-defined vehicles and humanoid robots — as a second growth wave over the next few years, playing to Murata’s strength in compact, lightweight components.
2. Pricing - Rather than hiking prices on identical parts, Murata sets fresh (higher) prices on each new-generation product as platforms change annually and bills-of-material climb. Management frames this as mix improvement; Goldman calls it a de facto price hike.
3. Silicon capacitors — Management acknowledged that TSMC, SEMCO, and Murata all have silicon capacitor technology. For PKG substrates with embedded capacitors, silicon capacitors are thin, enabling good surface flatness and high connection reliability with circuits. On the other hand, MLCCs are superior in terms of capacitance and customer usability. The company suggested that it is also developing MLCCs with high connection reliability and will be able to handle either approach.
Yageo
From the chat:
…its not true that Yageo is getting bid because of the spillovers going to tier 2 players.