Due to surging demand for tantalum capacitors driven by AI applications, Kemet, a subsidiary of passive component leader Yageo Group, has issued a price increase notice to customers. This marks Kemet’s second price adjustment this year, expanding the scope from distributors to direct clients, with the new prices taking effect on November 1. Supply chain sources indicate the hike ranges between 20% and 30%.
A recent report highlights an "inflationary" trend in the upstream electronics sector, with AI fueling a "cyclical and growth synergy" in the memory segment. Shortages and rising prices are already evident in memory, certain passive components, and high-end CCL. Enterprise storage prices continue to climb, while surging demand for high-capacity servers squeezes supply in consumer markets, driving a broad-based price rally.
The rapid expansion of AI server demand has prompted global cloud service providers to accelerate procurement of Nvidia GPU rack-scale solutions and in-house AI ASICs. It is projected that capital expenditures from the top eight CSPs will exceed $420 billion in 2025, potentially reaching $520 billion by 2026.
Notably, the high power consumption of AI servers significantly increases reliance on high-end passive components, particularly MLCCs. Research indicates that the adoption of AI devices is boosting demand for high-performance MLCCs, driving explosive growth in upstream materials. For example, assuming 0.22 tons of nickel powder per 100 million MLCCs, demand for nano nickel powder in high-end MLCCs is expected to surge from under 1,000 tons to over 6,000 tons by 2030, fueled by growth in new energy and AI sectors.
Additionally, replacement policies and the rise of new energy vehicles and AI are driving a sharp increase in passive component demand. Data shows that MLCC usage in new energy vehicles is six times that of traditional vehicles, while AI servers, AI PCs, and AI smartphones require approximately 100%, 40–60%, and 20% more MLCCs, respectively.
China’s passive component industry has seen rapid growth, supported by innovations in production and R&D, as well as the expansion of downstream sectors like new energy vehicles, photovoltaics, wind power, and energy storage. Domestic manufacturers are gradually increasing market penetration, with significant room for import substitution.
According to industry research, China’s passive component market reached ¥123.765 billion in 2023 and is projected to hit ¥258.359 billion by 2030, with a CAGR of 11.09%. The country has become the world’s largest MLCC market, with global MLCC revenue forecast to reach ¥112 billion by 2025, of which China will account for ¥47.3 billion.