Investment Rating - Industry View: In-Line [3] Core Insights - Japanese electronic component companies are distinguished by their value-added products, which are characterized by more layers and components that are smaller, thinner, lighter, and more durable [5][11] - The demand for high-performance computing and data centers is expected to accelerate due to advancements in deep learning and AI [5][11] - The automotive sector is transforming into mobile communication and sensor devices, necessitating more sophisticated components [5][11] - The rise of 5G smartphones and AI smartphones will require components that are more value-added, smaller, thinner, and lighter [5][11] - AI smartphones and AI PCs will demand higher electric power and batteries with increased capacity [5][11] Summary by Sections Market Demand - There is a growing need for value-added components in high-performance computing, AI smartphones, and automotive applications [13][14] - The server market is experiencing growth driven by AI servers that require high value-added components [31] Component Specifications - High-performance computing requires more advanced ABF (flip chip) package substrates for CPUs and GPUs [14] - The automotive sector, including ADAS and electric vehicles, requires durable components with enhanced value [14] - AI smartphones are projected to consume more electricity and necessitate batteries with higher energy density, such as silicon anode lithium batteries [14] Market Share and Growth - Murata held a 47% market share in MLCCs in 2023, an increase from 28% in 2004, showcasing its leadership in value-added products [14] - The total sales in the electronic components market for F24 reached JPY 12,548.1 billion, with significant contributions from various sectors including smartphones and automotive [16] Component Usage - The number of components required in various applications highlights the importance of MLCCs, with smartphones requiring approximately 1,000 MLCCs per device [18] - The automotive sector can require between 5,000 to 8,000 components, emphasizing the complexity and demand for high-quality parts [18] Future Trends - The shift towards Chiplets in HPC semiconductors is anticipated, which will involve more complex packaging solutions [14] - Business opportunities in the mobility industry utilizing IoT technology are expected to expand, leading to increased demand for high-performance modules [14]