While GPUs and memory chips have dominated headlines as the key enablers of artificial intelligence, a less glamorous but equally essential component is now emerging as a potential bottleneck: the multilayer ceramic capacitor, or MLCC. Often called "the rice of the electronics industry," MLCCs are tiny but ubiquitous components used in virtually every electronic device. The AI boom is driving a dramatic surge in demand, and manufacturers are seeing their order books—and share prices—soar.
According to Goldman Sachs, MLCCs could become the next major AI supply constraint after memory chips. The investment bank ranks MLCCs behind only GPUs and memory as the largest cost items in AI server construction and projects the AI-server MLCC market could expand more than fourfold between fiscal 2025 and fiscal 2030.
Why MLCCs Matter for AI
Modern AI training and inference servers consume far more power than conventional computing systems, requiring dramatically more capacitors to manage power stability and noise filtering. China Securities estimates that an AI server requires as many as 28,000 MLCCs per unit—roughly 13 times the number used in a standard server configuration.
This sharp jump in component requirements has tightened industry supply. TrendForce reported that by late June 2026, the book-to-bill ratios of the three largest Japanese and South Korean suppliers had climbed to their highest levels since the Covid-19 pandemic. Murata's ratio reached 1.30, Samsung Electro-Mechanics stood at 1.31, and Taiyo Yuden recorded 1.25, while the industry's overall ratio rose to 1.04. A book-to-bill ratio above 1.0 indicates that new orders exceed shipments, signaling growing demand.
"The volumes we are seeing today—it's scary," Taiyo Yuden CEO Katsuya Sase told Bloomberg in May. "The pressure is extremely intense because we could be easily overwhelmed if one supplier stumbles."
Stocks Surge as Investors Rotate into AI Infrastructure
Investor enthusiasm has mirrored those comments. Taiyo Yuden's shares have surged roughly 300% year-to-date, while Murata Manufacturing has climbed about 196%. Samsung Electro-Mechanics has rallied approximately 486%, and Taiwanese manufacturers Walsin and Yageo have each gained around 273%.
This rally reflects a broader rotation beyond traditional AI beneficiaries such as Nvidia. As noted in Nvidia Lags AI Peers as Rotation to Memory, Infrastructure Plays Accelerates, investors are increasingly looking at the entire AI supply chain.
Wall Street's Top Pick: Murata Manufacturing
Murata Manufacturing has emerged as a favorite among analysts. Morgan Stanley recently named Murata its top electronic-components pick, raising its price target from 5,100 yen to 12,500 yen. The brokerage expects demand for high-capacity MLCCs used in AI servers and data centres to roughly double annually over the next three years. Murata has been expanding MLCC production capacity by about 10% annually through fiscal 2026 and plans another 10% increase in fiscal 2027—a pace Morgan Stanley believes should be sufficient to meet projected demand.
SMBC Nikko Securities has also turned more bullish, lifting its price target to 13,400 yen from 4,000 yen. Goldman Sachs reiterated its Buy rating on Murata, retaining the stock on its Conviction List with a 12-month target price of JPY 12,600. With Murata currently trading around JPY 9,475, Goldman sees upside of roughly 33%.
Murata also benefited after Apple announced price increases for several products, reinforcing investor confidence that premium device makers retain pricing power to offset higher component costs. Murata is one of Apple's suppliers.
Price Hikes Begin, but Analysts Urge Caution
According to Citrini Research, spot and distributor prices for consumer MLCCs have already risen between 20% and 40% because of stockpiling and double booking. Junseo Park, an analyst at Mirae Asset Securities, recently raised forecasts for average selling prices of MLCCs at Samsung Electro-Mechanics by 10% for 2027. Price increases have already begun in some distribution channels, and with industry pricing negotiated quarterly, Park believes additional hikes are likely.
However, not everyone believes the current enthusiasm will automatically translate into sharply higher profitability. Masashi Kubota, research analyst at Bank of America Securities Japan, cautioned that some projections for MLCC price increases have become "excessive." Even if manufacturers succeed in raising prices, Kubota argued that much of the increase will likely offset higher fixed costs rather than significantly improve operating margins.
Still, most research houses believe the AI-driven demand cycle remains in its early stages. Goldman Sachs noted that while Murata expects AI infrastructure investment to peak around 2028, constraints such as power availability could extend the cycle. For investors seeking exposure beyond the Magnificent Seven, MLCC makers represent a high-growth niche within the broader AI infrastructure theme. As highlighted in 5 Under-the-Radar Stocks Analysts Favor for Summer 2026 as Market Broadens, these components are becoming increasingly critical to the AI ecosystem.
This article is for informational purposes only and does not constitute financial advice.
