Tiny capacitor, huge demand: the AI frenzy driving MLCC prices higher

Last year, it was memory chips. This year, the hottest commodity in Shenzhen’s Huaqiangbei electronics market is a component no larger than a postage stamp.
Chinese vendors of multilayer ceramic capacitors (MLCCs) are riding a massive wave of soaring prices driven by the global artificial intelligence boom.
Because these minuscule components are vital for regulating electric currents, global manufacturing lines are scrambling to keep up with skyrocketing demand from AI server clusters and electric vehicles.
The resulting supply crunch has sent the spot market into overdrive, with prices jumping two- to fourfold since Chinese New Year for high-capacitance MLCCs – components designed to store and discharge large amounts of electrical energy to support power-hungry processors – according to a distributor surnamed Wu.
“I don’t see any signs of prices cooling down,” said Wu, who mainly sells components from Japanese industry leader Murata Manufacturing to fellow traders and secondary distributors.

While high-capacity components are driving demand, the price hikes are hitting the spot market across the board. Some models have surged from 10 yuan per 1,000 units to 40 yuan (US$5.90), Wu said. But while inquiries are flooding his shop, actual transactions remain sluggish as buyers balk at the inflated price tags.
Other merchants report even steeper climbs that began accelerating through April and May. One merchant surnamed Zheng, who deals in MLCCs from South Korea’s Samsung Electro-Mechanics (SEMCO) and domestic firms like Chaozhou Three-Circle Group, said that highly sought-after models, such as the 0805 22μF MLCC, have seen prices skyrocket by over 20 times.
Both imported and domestic products have been surging, Zheng said. Another trader of SEMCO MLCCs said that frequent stock shortages have plagued his business since April due to production struggling to keep pace with demand.
What is playing out on the chaotic floors of Huaqiangbei is what Goldman Sachs has described as “the largest and longest cycle in history”. Leading Japanese and South Korean manufacturers are currently inundated with orders, fuelling expectations of a severe, prolonged supply crunch.
The industry is increasingly facing the risk of a “structural shortage” in the second half of this year, according to a report released on Wednesday by Taipei-based market research firm TrendForce.
Next-generation AI platforms are undergoing frequent design modifications in their final qualification stages, drastically multiplying the number of high-end MLCCs required per motherboard, the firm said.

The usage of one type of MLCC in Advanced Micro Device’s MI450 platform recently surged by a staggering 632 per cent – jumping from 1,440 units per board to 10,544 units – after engineers swapped out all aluminium electrolytic and tantalum capacitors, TrendForce said.
The report noted that MLCC demand would hit a “new peak” later this year as tech giants like Google, Amazon Web Services and Meta Platforms ramp up production for their custom AI chips.
As major manufacturers prioritise long-term contracts, clients relying on the spot market face hefty price premiums and severe shipment delays, TrendForce said.
According to macro research firm Citrini, spot and distributor prices for consumer-grade MLCCs have already risen 20 to 40 per cent due to defensive stockpiling and double-booking.