Original author: Dong Jing
Source: Wall Street Journal
Samsung Electro-Mechanics is moving its AI server MLCC business toward long-term contractization, a trend that is reshaping the supply and demand landscape of this core electronic component.
According to reports, Samsung Electro-Mechanics disclosed on July 23 that it has signed an MLCC supply contract worth 295.12 billion Korean won (approximately $204 million) with a global major technology company, with delivery scheduled for the entire year of 2027. The counterparty has not been disclosed due to a mutual confidentiality agreement.
This marks the second consecutive month that Samsung Electro-Mechanics has secured a large-scale order for AI server MLCCs following a contract worth approximately 450 billion Korean won in June. The total disclosed AI server MLCC contracts for this year have reached 750 billion Korean won (approximately $5.1 billion). When including the approximately 1.5 trillion Korean won long-term agreement for silicon capacitors signed in May, the total value of AI server component supply agreements this year has exceeded 2.25 trillion Korean won (approximately $1.5 billion).
Chang Duck-hyun, President of Samsung Electro-Mechanics, said:
This large-scale contract is the result of full recognition of Samsung Electro-Mechanics' MLCC technology as a core component of AI infrastructure. Based on our customers' deep trust, we will accelerate the development of next-generation cutting-edge products, build a stable supply chain, and lead the AI components market.
On the day the news was announced, Samsung Electro-Mechanics' stock surged more than 8% intraday, reaching 1.475 million Korean won, outperforming major constituents of the KOSPI index such as Samsung Electronics and SK Hynix.
Large-order accumulation: AI server MLCC orders accelerating
The contract amount represents approximately 2.6% of Samsung Electro-Mechanics' consolidated revenue of 11.3145 trillion Korean won last year, and includes large-volume shipments of high-performance MLCCs for customers' AI servers and data center systems. From a timeline perspective, Samsung Electro-Mechanics' AI server component orders this year have shown a clear acceleration:
In May, the company signed a long-term supply contract worth approximately 1.5 trillion KRW for silicon capacitors with a global client; in June, it signed another agreement worth approximately 450 billion KRW with a major global technology company for AI server MLCCs; the contract disclosed in July further raises the total publicly announced AI server MLCC contracts for the year to 750 billion KRW.
Reports indicate that industry observers note that such a high volume of long-term MLCC supply contracts is rare in the industry, signaling that MLCCs—a component category traditionally dominated by short-term orders—are accelerating their shift toward long-term agreements driven by demand for AI infrastructure.
MLCCs are often referred to as the "rice of the electronics industry," with their core function being to provide stable current and control voltage fluctuations in electronic circuits. In AI server applications, this function’s strategic value is significantly amplified.
AI servers require more than ten times the number of MLCCs compared to conventional servers—up to 600,000 MLCCs can be installed per server rack.
Meanwhile, AI servers impose extremely stringent requirements on MLCCs, demanding ultra-compact, ultra-high-capacity designs, along with multiple reliability standards such as high-temperature resistance, high-voltage tolerance, and resistance to substrate warping. The technical barriers are very high, and the number of companies capable of actual large-scale supply is extremely limited.
In terms of silicon capacitors, this product is installed inside AI chip packages (including GPUs and high-bandwidth memory HBM) to help stabilize power supply, with a resistance approximately one percent of that of traditional MLCCs, offering significant performance advantages.
Samsung Electro-Mechanics maintains a global leadership position in the AI server MLCC market, with a market share exceeding 40%. This market share advantage is considered a core driver behind the company’s continued appeal to major customers and a key factor behind the significant stock price surge following the disclosure of long-term agreements for silicon capacitors in May.
Samsung Electro-Mechanics stated that the company is currently in further discussions with multiple global customers regarding medium- to long-term MLCC supply plans, and aims to accelerate its transition toward a higher-value product portfolio centered on industrial, automotive electronics, and AI server applications by expanding long-term supply agreements to secure a stable demand base for AI server MLCCs.