The prices of semiconductors and chip multilayer ceramic capacitors (MLCCs) are rising across the board. This is not a short-term speculation, but mainly driven by AI-related demand seizing production capacity.

I. Why are semiconductor prices rising across the board?

1. Booming AI computing demand has fully occupied production capacityAn AI server uses 8 to 10 times more chips and MLCCs than a regular server.Wafer fabs including TSMC, Samsung and UMC prioritize allocating advanced process nodes and 8/12-inch wafer capacity to major AI clients.Capacity for mature processes reserved for automotive, industrial control and consumer electronics has been squeezed, leading to widespread shortages and price hikes of MCUs, MOSFETs and analog chips.

2. Sharp increases in raw materials, energy and logistics push up overall costsPrices of silicon wafers, photoresists, specialty gases, copper foils and epoxy resins have all gone up.Precious metals have seen drastic surges: silver has risen by over 130%, while palladium, nickel and copper also climbed sharply, directly increasing costs for packaging, electrodes and substrates.Rising energy and logistics costs have lifted overall manufacturing expenses by 15% to 25%.

3. Production cuts and destocking in previous years result in tight inventoryThe industry faced a downturn from 2023 to 2024. Manufacturers reduced output and distributors cleared inventories, bringing current stock levels to historic lows.Capacity expansion takes a long time: new production lines for wafers and MLCCs require 2 to 3 years to launch, making it impossible to fill the supply gap in the short term.

4. Market oligopoly gives pricing power back to manufacturersThe semiconductor and MLCC markets are dominated by a handful of major players, including Murata, Samsung, Yageo, TI, STMicroelectronics and Infineon.Driven by supply shortages and rising costs, most manufacturers issued price increase notices in late May, which will take effect uniformly on July 1.

II. Why are multilayer ceramic capacitors (MLCCs) also soaring in price?

Known as the "staple of the electronics industry", MLCCs are adopted in nearly all electronic products. Prices have surged dramatically in this round, with a general increase of 20% to 40%, and high-end models even doubling in price.

1. AI servers consume massive quantities of MLCCs, with 30,000 pieces per unitEach board of NVIDIA VR200 platform uses 30,000 MLCCs, 30 times the amount used in a smartphone and 3 times that in a vehicle.These components require high capacitance, high voltage resistance, high temperature resistance and superior stability, which cannot be produced on ordinary consumer-grade production lines.

2. Murata and Samsung shift most capacity to AI and automotive-grade products, squeezing out standard componentsMurata operates at a maximum capacity utilization rate of 95%, focusing on high-margin AI and automotive-grade products.Production of mainstream models such as 0402/0603 form factors and X5R/X7R type standard MLCCs has been reduced, restricted and order-limited.Leading domestic manufacturers including Fenghua Hi-Tech are also unable to take new orders, with order lead times extended to half a year.

3. Silver paste accounts for 40% to 50% of MLCC costs; skyrocketing silver prices force price adjustmentsThe price of silver has jumped from $30 to $80 per troy ounce, a rise of over 130%.Silver paste is essential for electrodes and terminations. Costs are inevitably passed on, and manufacturers cannot sustain operations without raising prices.

4. Panic stockpiling by distributors exacerbates the supply crunchFearing supply disruptions, customers place orders 2 to 3 times the normal volume, and distributors hoard goods, further tightening the spot market.

III. Summary

The combination of capacity occupation by AI demand, soaring raw material costs, depleted inventories and oligopolistic pricing has triggered price hikes across the entire industrial chain.MLCC prices have risen more sharply than most chips, due to skyrocketing AI-related consumption, capacity occupation by high-end products and the steep increase in silver prices.