Original author: Dong Jing
Original source:Wall Street Journal
Samsung Electro-Mechanics is pushing its AI server MLCC business towards a "long-term contract" model, 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 the company has signed a supply contract for MLCC worth 295.12 billion won (approximately 204 million USD) with a large global technology company, the supply period is for the entire year of 2027. The counterpart is not disclosed due to a confidentiality agreement between the parties.
This is the second consecutive month that Samsung Electro-Mechanics has secured large-scale orders after signing a contract worth about 450 billion won for AI server MLCC in June. The total amount of AI server MLCC contracts disclosed this year has reached 750 billion won (approximately 510 million USD). If we include the long-term contract for silicon capacitors signed in May, worth about 1.5 trillion won, the total amount of AI server component supply agreements this year has exceeded 2.25 trillion won (approximately 1.5 billion USD).
Samsung Electro-Mechanics President Chang Duck-hyun stated:
"This large-scale contract is a result of Samsung Electro-Mechanics' MLCC technology being fully recognized as a core component of AI infrastructure. Based on the deep trust of our customers, we will accelerate the development of next-generation advanced products, build a stable supply chain, and lead the AI component market."
On the day the news was announced, Samsung Electro-Mechanics' stock price surged over 8% during trading, reaching 1.475 million won, leading the gains among KOSPI constituent stocks, ahead of major weights like Samsung Electronics and SK Hynix.
Continuous Large Orders: AI Server MLCC Orders Accelerate Accumulation
The contract amount accounts for about 2.6% of Samsung Electro-Mechanics' consolidated revenue of 11.3145 trillion won last year, with the supply being a large volume of high-performance MLCC for client AI servers and data center systems. In terms of timeline, Samsung Electro-Mechanics' AI server component orders this year have shown a significant acceleration trend:
In May, the company signed a long-term silicon capacitor supply contract worth about 1.5 trillion won with a global customer; in June, it signed an AI server MLCC supply agreement worth about 450 billion won with another large global technology company; the contract disclosed in July further pushes the total disclosed AI server MLCC contracts this year to 750 billion won.
Industry observers pointed out that such a dense large-scale long-term MLCC supply contract is rare in the industry, marking a shift in the traditionally short-term order-focused MLCC component category, driven by demand for AI infrastructure, towards a long-term contract model.
MLCC is known as "the rice of the electronics industry," with its core function being to provide stable current and control voltage fluctuations for electronic circuits. In the context of AI servers, the strategic value of this function is significantly amplified.
Compared to ordinary servers, the quantity of MLCC required for AI servers exceeds tenfold—each server rack can accommodate up to 600,000 MLCCs.
Meanwhile, AI servers have extremely strict specifications for MLCC, requiring ultra-small, ultra-large capacity designs, as well as high-temperature and high-pressure resistance, and resistance to substrate warping, among several reliability standards, resulting in a very high technical threshold with limited companies capable of actual large-scale supply.
In terms of silicon capacitors, these products are installed inside AI chip packaging (including GPUs and high bandwidth memory HBM) to assist in stabilizing power supply, with resistances about one percent of traditional MLCCs, showcasing significant performance advantages.
Samsung Electro-Mechanics maintains a global leading position in the AI server MLCC market, with a market share exceeding 40%. This market share advantage is considered a core support for the company’s continued preference from large customers and is an important driver for the stock price surge following the disclosure of the long-term silicon capacitor contract in May.
Samsung Electro-Mechanics stated that the company is currently engaged in further discussions with several global customers regarding medium-to-long-term MLCC supply plans, and plans to accelerate the transition to a high value-added product portfolio centered around industrial, automotive electronics, and AI server applications by expanding long-term supply contracts, while solidifying stable demand for AI server MLCC.
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