Samsung Electro-Mechanics is steering its AI server MLCC business towards a model based on long-term agreements, a trend that is reshaping the supply and demand dynamics for this crucial electronic component.

It was reported that on July 23, Samsung Electro-Mechanics disclosed it had signed a supply contract worth 295.12 billion won (approximately $204 million) for MLCCs with a major global technology company, with the supply period covering the full year of 2027. The counterparty was not disclosed due to a confidentiality agreement between the parties.

This marks the second consecutive month that the company has secured a major order of this type, following a deal worth about 450 billion won for AI server MLCCs in June. The total value of publicly disclosed AI server MLCC contracts this year has now reached 750 billion won (around $510 million). When including the approximately 1.5 trillion won long-term silicon capacitor agreement signed in May, the total value of AI server component supply agreements for the year exceeds 2.25 trillion won (approximately $1.5 billion).

President Chang Duck-hyun of Samsung Electro-Mechanics stated: "This large-scale contract is a result of our MLCC technology being fully recognized as a core component for AI infrastructure. Based on the deep trust of our customers, we will accelerate development of next-generation cutting-edge products, build a stable supply chain, and lead the AI component market."

On the day the news was announced, shares of Samsung Electro-Mechanics surged as much as 8% intraday, reaching 1.475 million won, outperforming heavyweight stocks like Samsung Electronics and SK Hynix within the KOSPI index.

Rapidly Accumulating Orders: AI Server MLCC Contracts Accelerate

The value of this latest contract represents about 2.6% of the company's consolidated revenue of 11.3145 trillion won last year. The supply involves large quantities of high-performance core MLCCs for the customer's AI servers and data center systems. The timeline shows a clear acceleration in AI server component orders for Samsung Electro-Mechanics this year.

In May, the company signed a roughly 1.5 trillion won long-term supply contract for silicon capacitors with a global customer. In June, it secured another agreement worth about 450 billion won for AI server MLCCs with a major global tech firm. The contract disclosed in July now pushes the total value of publicly announced AI server MLCC contracts for the year to 750 billion won.

Industry observers noted that such a concentrated series of large-scale, long-term MLCC supply contracts is rare within the sector. It signals that MLCCs, a component category traditionally dominated by short-term orders, are rapidly evolving towards a long-term agreement model, driven by demand from AI infrastructure.

MLCCs, often called the "rice of the electronics industry," primarily function to provide stable current and control voltage fluctuations in electronic circuits. In the context of AI servers, the strategic value of this function is significantly amplified.

Compared to standard servers, AI servers require more than ten times the number of MLCCs—with up to 600,000 units potentially installed per server rack.

Simultaneously, AI servers impose extremely stringent specifications on MLCCs. They must meet requirements for ultra-miniaturization, high capacity design, and high reliability standards such as heat resistance, high voltage tolerance, and resistance to substrate warping. The technological barriers are high, and the number of companies capable of large-scale supply is extremely limited.

Regarding silicon capacitors, these products are installed inside the AI chip package (including GPUs and HBM) to assist in stabilizing the power supply. Their resistance is approximately one-hundredth that of traditional MLCCs, offering significant performance advantages.

Samsung Electro-Mechanics maintains a leading global position in the AI server MLCC market, with a share exceeding 40%. This market share advantage is considered a core factor in the company's continued success in securing major clients and was a key driver behind the significant stock price increase following the disclosure of the silicon capacitor long-term agreement in May.

The company stated it is currently engaged in further discussions with multiple global clients regarding mid- to long-term MLCC supply plans. It plans to solidify the stable demand base for AI server MLCCs by expanding long-term supply contracts while accelerating the transition to a high-value-added product portfolio focused on industrial, automotive electronics, and AI server applications.