AI-related long-term supply contract 3.9 Trillion Won… 5 cases related to MLCC 2.4 Trillion Won
Operation rate around 90%, delivery period prolonged… Prices of high-end products also rise
The investment frenzy for artificial intelligence (AI) data centers is spreading to multilayer ceramic capacitors (MLCCs). As the number of AI servers equipped with high-performance GPUs increases, orders for high-end MLCCs that manage power and signals stably are also rapidly increasing. The AI-related long-term supply contract secured by Samsung Electro-Mechanics this year is close to 4 Trillion Won.
Samsung Electro-Mechanics (009150) announced on the 6th that it signed a contract to supply MLCC for AI servers worth $210.24 million (approximately 2856 Billion Won) with a large global company. The supply period is from January 1 to December 31, 2027.
Since May of this year, Samsung Electro-Mechanics has signed a long-term supply agreement (LTA) worth approximately 3.9 trillion Won for silicon capacitors, MLCCs for AI servers, and inductors. Among these, there are 5 supply contracts involving MLCC, worth approximately 2.3919 Billion Won. There are four MLCC exclusive contracts worth about 2.1069 Billion Won, and one MLCC/inductor contract worth 2.850 Billion Won. The supply period for all five cases is 2027.
10 times more MLCC per AI server
MLCC is a component that stores electricity and supplies it when needed and reduces signal interference occurring in the circuit. It is used in most electronic products such as smartphones, cars, and servers.
For AI servers, the required quantity varies. This is because power usage and instantaneous voltage changes increase as multiple high-performance GPUs run simultaneously. More high-capacity and high-reliability products are needed than regular servers.
According to Samsung Electro-Mechanics, one AI server contains more than 10 times more MLCCs than a regular server. As GPU generations change, the load capacity also increases. Market research firm Trend Force predicted that while about 6,500 MLCCs will be used in the NVIDIA GB200 compute board, the next-generation Rubin-based board will use about 12,000.
Goldman Sachs predicted that the MLCC market for AI servers will grow from $1.4 billion last year to $5.8 billion in 2030. The average annual growth rate is about 34%. Samsung Electro-Mechanics announced that it has secured more than 40% market share in the MLCC market for AI servers.
Operation rate around 90%, delivery time of 20 weeks... Move production line for AI servers
As orders increased, production line capacity also decreased. Samsung Electro-Mechanics' component business operation rate in the first half of this year recorded 91%. It is understood that the delivery time for some high-capacity X6S products has increased from the existing 8 weeks to up to 20 weeks.
Prices are also rising. Trend Force predicted that the price of Samsung Electro-Mechanics' X6S product for AI servers will rise by an average of 10 to 20 percent through negotiations with each customer in the fourth quarter. Samsung Electro-Mechanics' average selling price (ASP) for MLCC in the first half of the year increased by 13.9% compared to the same period last year.
The production line is also moving toward high-spec products. As Japanese and Korean companies divert some of their existing X5R production capacity to X6S and X7R for AI servers, some orders for general-purpose products are being transferred to Taiwanese and Chinese companies.
A similar trend can be seen in global number one Murata. Capacitor order backlog in the second quarter of this year increased by 49% compared to the previous quarter. As orders pile up not only from Samsung Electro-Mechanics but also from leading global companies, the demand for MLCC for AI servers is increasing throughout the industry.
2.4 trillion MLCC contract to be supplied next year... Performance reflection begins in earnest
The increase in sales of AI server products is also reflected in Samsung Electro-Mechanics' performance. Sales in the second quarter of this year were 3.4572 Billion Won, up 24.2% from the same period last year, and Operating Profit was 44.04 Billion Won, up 106.7%.
Sales of the component division responsible for MLCC increased by 29% to 1.6494 Billion Won. The company cited increased sales of high-value products such as AI servers, networks, and MLCCs for automotive applications as a factor in improving performance.
All five long-term supply contracts related to MLCC announced this year will be supplied next year. It will also be next year when the contract volume worth about 2.4 trillion Won will be transferred to actual supply.
Samsung Electro-Mechanics has also begun to expand its production capacity. We plan to invest approximately 15 Trillion Won by 2040 to develop the Busan plant into a production and research and development base for package substrates for AI data centers and high value-added MLCC.
As the long-term contracts secured this year will be supplied starting next year, Samsung Electro-Mechanics' MLCC sales for AI servers are expected to increase in earnest. As investments in the Busan business site and additional long-term contracts continue, data centers are growing as a new large demand source for MLCCs following smartphones and electronics.
