As generative AI infrastructure expands, supply and demand for server-grade passive components is tightening rapidly. Samsung Electro-Mechanics, the world's second-largest maker of multilayer ceramic capacitors (MLCCs), has locked in projections that its 2027 MLCC sales will surpass 8 trillion won, and has begun raising direct-sale prices to OEM customers starting in the second half of the year. At the same time, Murata Manufacturing, the world's top MLCC maker, announced end-of-life (EOL) plans for nine general-purpose product lines. Amid structural changes reminiscent of the 2018 mega-cycle, where is the global passive components supply chain headed?
AI Infrastructure Is Reshaping the MLCC Landscape
The power demands of generative AI accelerators and servers have fundamentally transformed the passive component makeup on circuit boards. Compared with conventional general-purpose servers, AI servers use more than ten times as many MLCCs per unit.
Required specifications are also climbing sharply. Around high-heat accelerators, high heat-resistance specifications (such as the X6S standard) and higher capacitance are required, concentrating demand on small, high-capacitance components that handle noise suppression and transient response on power lines. As a result, manufacturers have been rapidly shifting production capacity toward cutting-edge products, sparking competition for production lines with conventional general-purpose products for consumer devices.
In response to this supply-demand imbalance, the two industry giants from Japan and Korea that dominate global market share have moved simultaneously. Samsung Electro-Mechanics, backed by major contract wins, has pushed forward with AI-focused production increases and price hikes, while Murata has begun winding down legacy specifications it has supplied for years. In the passive components market that underpins the foundation of electronic devices, a supply realignment of a scale not seen since 2018 is now underway.
Sales Up 75% in Two Years: MLCCs to Account for Half of Company Revenue
Samsung Electro-Mechanics' rapid growth is backed by a series of large AI server contracts disclosed through South Korea's Financial Supervisory Service's Data Analysis, Retrieval and Transfer System (DART). The three AI-server MLCC supply contracts Samsung Electro-Mechanics disclosed in 2026 total 1.8213 trillion won (454 billion won, 295.1 billion won, and 1.0722 trillion won), with the largest single contract, disclosed in September, accounting for the majority (58.9%) of that total. The company announced sales supply contracts of 454 billion won on June 30, 2026, 295.1 billion won on July 23, and then the largest single contract in its history—1.0722 trillion won—on September 1.
These contracts are scheduled to begin full-scale deliveries starting in 2027. According to industry estimates, Samsung Electro-Mechanics' MLCC sales are projected to grow roughly 75% (an increase of 3.526 trillion won), from 4.715 trillion won in 2025 to 8.241 trillion won in 2027, accounting for 45.7% of the company's total sales (18.05 trillion won). The average selling price in the components division rose 13.9% in the first half of 2026, and the company now holds more than 40% share of the AI server market.
The components division, whose performance had long been tied to smartphone shipment trends, is now transforming into a revenue structure centered on high-value-added products for servers.
91% Utilization and an Aggressive Pricing Strategy: Direct OEM Price Hikes to Curb General-Purpose Demand
Driving this sharp improvement in profitability are high factory utilization rates and an aggressive pricing strategy. According to Samsung Electro-Mechanics' 2026 half-year report, the components division's production capacity stood at 615.6 billion units as of the end of the second quarter, with actual production reaching 561.4 billion units—an average utilization rate of 91%. High-capacitance MLCC production lines are effectively approaching full capacity.
With supply capacity nearing its limits, the company has decided to raise direct sales prices to OEM and ODM customers starting in the fourth quarter of 2026. Unlike typical price negotiations conducted through distributors, this represents an unusual move to revise unit prices on long-term supply contracts signed directly with major clients.
The scale of the price hikes varies clearly by product category. Under the OEM direct price increases Samsung Electro-Mechanics plans for the fourth quarter of 2026, the hike for consumer-grade X5R components (25–30%) is roughly 1.5 to 2 times larger than that for high heat-resistance X6S components used in AI servers (10–20%). While consumer-grade X5R components used in PCs and smartphones will see a steep 25–30% price increase, high heat-resistance X6S components for AI servers and automotive applications will rise only 10–20%. The intent is to deliberately curb orders for low-margin general-purpose products by applying price pressure, redirecting scarce cleanroom and equipment capacity toward the higher-margin AI server segment.
Murata's Nine-Line EOL Is Reshaping the Market
As Samsung Electro-Mechanics accelerates its focus on AI, Murata Manufacturing, the world's top maker, has also announced a major overhaul of its product portfolio. The company has sent end-of-life (EOL) notices to customers and distributors covering a total of nine MLCC product lines, including its mainstay consumer lines GRM, GRJ, and GRT, as well as GXM and GXT, and the automotive-grade GCM, GCJ, GCG, and ZRA lines.
According to the notices, the final order date is set for March 31, 2028, with final shipment on March 31, 2029. The affected products are primarily relatively large legacy specifications and low-capacitance components.
The scope of impact is extremely broad. Murata's annual sales total approximately 1.8 trillion yen, with MLCCs accounting for more than half. The nine lines subject to EOL represent 10–20% of MLCC sales (roughly 90–180 billion yen), and the transition period between the final order deadline (end of March 2028) and final shipment (end of March 2029) is expected to create major opportunities for Taiwanese and Korean rivals to capture switched orders. Murata plans to concentrate its capital investment on small, ultra-high-capacitance components requiring high-density mounting and on high-reliability automotive products, while gradually withdrawing from the general-purpose market.
A Repeat of the 2018 Supercycle? Order Shifts to Taiwan and an Irreversible Structural Change
The current market shift echoes the supply-demand structure that shook the passive components industry between 2016 and 2018. In 2016, TDK announced it would discontinue supply of roughly 280 consumer-oriented items as it shifted focus to the automotive market, and Murata followed with cuts to some general-purpose products of its own. The resulting supply shortage developed into a historic supercycle in 2018, when MLCC transaction prices soared by several times to several dozen times their original levels.
The current situation has even greater room for demand growth than back then. Demand for server-grade MLCCs continues to expand in proportion to the growing scale of AI models, and Samsung Electro-Mechanics' production increases are already being absorbed by major cloud providers. On top of that, Murata's EOL of nine product lines has forced manufacturers of consumer and industrial equipment to scramble for alternative supply sources.
Emerging as the primary beneficiaries are Taiwan's Yageo and Walsin Technology. Taiwanese manufacturers have already begun receiving inquiries from customers in Europe, the Americas, and Asia about alternative products and switched orders. As Murata's final shipment deadline of March 2029 approaches, leadership in the general-purpose market is shifting to Taiwanese firms, while the top two players from Japan and Korea are solidifying high-margin positions in the advanced AI segment. The division of labor in the passive components market has entered an irreversible new phase.