Summary of J.P. Morgan's MLCC Industry Report Industry Overview - The MLCC (Multi-Layer Ceramic Capacitor) industry is entering a growth acceleration phase over the next five years, driven by new demand from AI, automotive, and robotics applications [1][4] - The industry experienced a 9% unit CAGR from 2016 to 2019, followed by a stagnation period with only 2% CAGR from 2019 to 2022 due to the pandemic [4] - A forecasted CAGR of 6-7% is expected from 2022 to 2025, with AI server adoption as a significant growth driver [4] Key Demand Drivers Automotive Sector - Demand for electric vehicles (EVs) and plug-in hybrid electric vehicles (PHEVs) is robust, with a 26% year-over-year growth despite policy challenges in the U.S. [4] - The forecast for automotive MLCC content is expected to increase from over 6,000 units in 2023 to 13,000 or more by 2030 [4] - Major automakers are expanding their advanced driver-assistance systems (ADAS), which will significantly increase MLCC consumption [4] High-Performance Computing (HPC) - AI servers are projected to consume 8-10 times more MLCC units than general-purpose servers, with a forecasted growth rate of 34% CAGR over the next five years [4] - A GB server rack consumes approximately 300-350k MLCC units, indicating substantial demand from AI applications [4] Robotics - The robotics sector, particularly humanoid robots, is anticipated to have high content consumption similar to vehicles, with projections of 300+ billion MLCC units by 2030 [5][4] Market Dynamics - The shift towards larger MLCC units is expected to tighten supply-demand dynamics, leading to improved pricing for commodity IT MLCCs [6] - Leading MLCC producers have reported an effective utilization rate (UTR) above 80%, indicating a recovery from previous lows [6] - The sales mix for automotive MLCCs has increased significantly, with SEMCO gaining market share and becoming the second-largest supplier [6] Investment Recommendations - J.P. Morgan recommends an "Overweight" (OW) rating on SEMCO and Yageo, citing their growth potential in the automotive sector and other components [6] - TDK is favored within the Japan component coverage due to strong fundamentals in battery operations, while Murata and Taiyo Yuden are rated Neutral due to concerns over margin recovery and inventory issues [6] Financial Projections - The MLCC industry is projected to see a revenue increase from $2.895 billion in 2024 to $6.334 billion by 2030, with a year-over-year growth rate of 12% in 2025 [27] - The automotive sector's share of total MLCC demand is expected to rise from 8.2% in 2016 to 19.7% by 2030, reflecting the growing importance of automotive applications [27] Conclusion - The MLCC industry is poised for significant growth driven by advancements in automotive technology, AI, and robotics, with favorable market conditions expected to support margin expansion and improved pricing dynamics [1][6]