Editor's Note: The focus of the AI industry chain is shifting from core chips such as GPUs and HBMs to more segmented basic components. Goldman Sachs recently expressed optimism towards MLCCs and added Murata Manufacturing to its "Conviction Buy List," indicating that the market is reevaluating the value of power management, passive components, and other elements in the AI infrastructure cycle.
MLCC is not the most prominent AI component, but it is widely found in smartphones, electric vehicles, servers, and high-performance computing devices, fulfilling basic functions such as voltage stabilization, filtering, and current regulation. As AI server power consumption rises and power system complexity increases, the demand for such small components is beginning to surge.
The key point of this article is that Goldman Sachs has extended the MLCC industry's growth cycle from the previously anticipated 2028 to around 2030. This implies that AI is bringing not only prosperity to a single chip segment but may drive the entire electronic supply chain into a longer cycle of supply and demand. The repricing of manufacturers such as Murata and Nantong Jianghai reflects the capital market's search for the next group of "hidden beneficiaries" in the AI boom.
Against the backdrop of the continuous expansion of AI infrastructure, capacitors may not be the most lively theme but could be a crucial observation point for the overflow of the supply chain's prosperity.
Below is the original text:
Capacitors are receiving attention as a key component in AI technology. Goldman Sachs notes that the growth potential of capacitors in the supply chain is on the rise.
Is the Importance of Capacitors in the AI Supply Chain Increasing?
Capacitors, especially multilayer ceramic capacitors, are gaining increasing attention in the tech industry. With financial analysts, especially Goldman Sachs, showing clear bullishness, these tiny components are expected to become more critical as various industries accelerate their shift towards artificial intelligence. Capacitors are being valued because they play a vital role in regulating current in various modern electronic devices.
Goldman Sachs recently met with Murata Manufacturing's President, Norio Nakajima. Murata Manufacturing is a global leader in multilayer ceramic capacitor manufacturing. Following the meeting, Goldman Sachs gave a strong recommendation for Murata's stock, upgraded its rating, and included it in the high-profile "Conviction Buy List." The target price set by Goldman Sachs for Murata is 5400 Japanese Yen, approximately $33.88. This optimistic stance demonstrates Goldman Sachs' high confidence in Murata's market position, especially amidst the rapid evolution of AI technology.
How Long Will the MLCC Market Cycle Last?
The market cycle around Multilayer Ceramic Capacitors (MLCCs) is being reassessed. Previously, many experts projected that the MLCC industry cycle would peak around 2028. However, Goldman Sachs now anticipates that the market's growth may continue until around 2030. This not only means that the expected cycle has been extended by two years but also represents a significant shift in market forecasts. For an industry that typically experiences cycles of three to four years, this change is particularly noteworthy.
Who Will Benefit from This Trend?
Murata Manufacturing Co., Ltd. is the most notable company in this trend. As a global leader in MLCC manufacturing, Murata's stock's premium position, following its inclusion in Goldman Sachs' "Conviction Buy List," demonstrates the market's optimism about its future potential.
Additionally, Goldman's analysis also mentioned Nantong Jianghai Capacitor Co., Ltd., another key player in this field. With a favorable position in the Chinese market, Nantong Jianghai has received a new target price of 39.20 RMB. This reflects the increasing demand for stronger power management solutions driven by AI applications, which will have an impact on a broader electronic supply chain.
Why Are MLCCs So Critical for Electronic Devices?
Understanding the subtle role of Multilayer Ceramic Capacitors is crucial. Although these components are often overlooked, their usage in various devices is quite substantial. For example, a typical smartphone contains approximately 1000 capacitors, while the number of capacitors used in a modern electric vehicle may be even higher in the thousands.
Historically, the MLCC market has experienced cyclical fluctuations, often switching between oversupply and shortages. One of the most profound impacts occurred between 2017 and 2018 when there was a simultaneous surge in demand from the automotive and smartphone industries, leading to delivery lead times extending to several months. This clearly demonstrated the critical role of MLCCs in the electronics industry.
How Should Investors View These Companies?
For investors looking to invest in Murata, it is important to note that Murata is primarily listed on the Tokyo Stock Exchange, while Nantong Jianghai is traded on the Shenzhen Stock Exchange. The listing location differences compared to the more common NASDAQ-listed stocks may raise the investment threshold.
Furthermore, despite Murata's dominant position in the MLCC market, there are other significant competitors in the field such as Samsung Electro-Mechanics, TDK, and others. Therefore, when evaluating investment opportunities in the capacitor sector, investors also need to carefully consider the industry's competitive landscape.
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