Murata permanently halts production of some consumer-grade MLCCs as Japanese and Korean makers shift to high-end

Source: Mikuang Investment

In June of this year, leading MLCC manufacturers such as Yageo initiated a wave of price hikes. While secondary market capital rushed in, it soon found itself trapped at elevated levels. Since then, MLCC has remained a closely watched sector.

However, as capital remains anxious over price-driven positions and debates the timing of the next restocking cycle, a far more profound transformation has quietly taken root at the industry level.

On September 11, Murata Manufacturing, the global MLCC leader, announced a product line optimization: discontinuing certain MLCC products while expanding other production capacities.

Many observers dismissed this as a routine internal business adjustment. But when viewed alongside recent moves by Japanese and Korean MLCC firms, a clear pattern emerges: this is not an ordinary production line adjustment—it is a coordinated capacity replacement strategy.

Apparent Production Line Adjustments, Actual Capacity Replacement

• Murata (global market share >40%) officially announced a product line upgrade: permanent discontinuation of mainstream consumer-grade and general automotive MLCC models, while adding ¥80 billion in capital expenditure. Freed-up capacity and R&D resources will be redirected entirely to AI server, ultra-high-capacity, and high-reliability high-end MLCC. Current high-end orders are locked through 2027, with delivery lead times extended to 20–26 weeks. High-end capacity remains fully utilized and in short supply.

• Samsung Electro-Mechanics followed suit: in Q4 2026, it will raise prices on mid-to-low-end consumer MLCC by 25%–30%, using market mechanisms to phase out low-margin, inefficient orders and strictly control low-end capacity expansion. All new capacity will be allocated to high-end bases in Busan and the Philippines, focusing on AI computing and high-end automotive MLCC, with long-term orders secured from global leading companies.

• Secondary Japanese leaders are also aligning: Kyocera announced a seven-year, ¥100 billion expansion plan entirely dedicated to high-end AI MLCC. Taiyo Yuden has cut redundant general automotive capacity, reallocating resources toward high-capacity, high-end products.

This is a deliberate, controlled, and strategically ambitious capacity replacement: abandoning low-margin, low-barrier, red-sea general markets while doubling down on high-barrier, high-premium, high-growth core markets. Freed-up capacity, equipment, and R&D personnel are all being redirected to AI server, ultra-high-capacity, and high-reliability high-end MLCC.

This marks the first coordinated strategic contraction and upgrade across the entire Japanese and Korean MLCC industry. It may directly end a decade of industry-wide low-price competition and usher in a new phase of global supply chain stratification and accelerated domestic substitution.

This Adjustment Differs from Previous Cycles

Past MLCC cycles followed a clear inventory pattern: demand recovery → restocking and price increases → capacity release → price declines, repeating endlessly.

But the 2026 production line adjustments break entirely from this traditional cycle framework, exhibiting strong structural, long-term, and irreversible characteristics.

First Difference: A Quantum Leap in Capacity Value

The old MLCC logic was scale-driven and volume-based profitability. This system is now collapsing under the surge in AI demand.

Industry data shows that converting a traditional low-end consumer MLCC production line to produce ultra-high-capacity high-end products for AI servers increases the line's commercial value by 5–10 times.

Through capacity replacement, Japanese and Korean manufacturers have transitioned from a scale-production OEM mindset to a technology-barrier premium mindset. High barriers, high margins, and high reliability now form the new profit core.

Second Difference: High-End Capacity Cannot Expand Quickly

High-end AI and automotive-grade MLCC face four simultaneous barriers: technical formulation, production yield, precision equipment, and customer certification. A single complete expansion cycle takes 18–24 months.

Combined with sustained rapid expansion in AI computing demand, the current supply-demand mismatch—high-end shortages alongside mid-to-low-end contraction—is expected to persist at least until 2028. The industry's structural cyclical upturn has been significantly extended.

Market Stratification: China, Japan, and Korea Stake Out Positions

• Mid-to-low-end general MLCC: As Japanese and Korean capacity continues to exit, excess capacity is gradually absorbed. The long-standing low-price competition deadlock is broken. Overall profitability shifts from loss-making competition to stable, modest margins.

• High-end AI and automotive MLCC: Driven by inelastic demand, technology monopolies, and long-term locked-in orders, product pricing power continues to rise. The price gap between high-end and low-end products widens decisively.

MLCC has moved from homogeneous profitability across all players to a stratified profit era: stable profits at the low end, supernormal profits at the high end.

Following this adjustment, the global MLCC supply chain has formed a clear, stable structure:

• Japanese and Korean firms firmly control high-value-added core segments: AI servers, high-end automotive, precision industrial. They hold the most advanced technology, largest orders, and ultimate pricing power.
• Mainland China and Taiwan firms absorb the spillover mid-to-low-end general capacity gap, dominating mass consumer and general industrial markets.

This division—Japan/Korea controlling high-end, cross-strait firms handling mid-end—is expected to solidify for years.

After divesting low-end businesses, Japanese and Korean firms concentrate R&D resources on miniaturization, ultra-high capacity, high-temperature resistance, and high reliability, further strengthening high-end barriers.

Meanwhile, domestic Chinese MLCC companies will see increasing market share concentration in mid-to-low-end segments, filling the void left by Japanese and Korean exits.

Post-stratification, industry entry barriers have risen across the board: low-end competition no longer centers on price but on scale, stable quality, and efficient delivery. High-end competition involves multiple barriers in technology, certification, and capacity.

Global MLCC Competitive Landscape Set for the Next Three Years

Looking back from 2026, the competitive landscape for the next three years is clear, with distinct competitive logics and growth ceilings for each segment.

High-End Track: Japanese-Korean Oligopoly Solidified, Barriers Hard to Breach

In AI servers, high-end automotive, and precision industrial control, Japanese and Korean top manufacturers hold over 90% of global market share. Decades of technical accumulation, stringent customer certification systems, and long-term locked-in large orders create extremely high moats.

Over the next three years, there is virtually no opportunity for new entrants. Japanese and Korean firms will continue to monopolize the high-end market, controlling technology iteration leadership, product pricing, and supply chain influence.

Mid-End General Track: Golden Window for Domestic Scale Substitution

The mid-to-low-end general track, voluntarily vacated by Japanese and Korean firms, presents a long-term, stable capacity gap that will not disappear with short-term demand fluctuations.

Leveraging localized supply chain support, scale advantages, cost control capabilities, and efficient delivery systems, leading domestic Chinese manufacturers are steadily absorbing global overflow orders. Competition logic has shifted from low-price competition to comprehensive strength in scale, quality, delivery, and service.

Over the next three years, domestic firms will completely dominate the global mid-to-low-end MLCC market, completing the historic process of scale substitution.

Sub-High-End Track: Core Breakthrough Point for Domestic Technology

General automotive, mid-end industrial control, and communications equipment MLCC represent the only ambiguous zone in the industry and the most fiercely contested battlefield.

On one hand, Japanese and Korean firms still hold some residual share but are steadily contracting and exiting. On the other hand, domestic manufacturers are maturing technologically, pushing for high-end certification and breaking through technical bottlenecks to capture the emerging space.

Over the next three years, this track will become the core breakthrough point for domestic technology advancement and industrial upgrading, as well as the key battleground for reshaping the global MLCC landscape.

Farewell to the Old Cycle, Entering a New Cycle

This round of Japanese-Korean MLCC capacity replacement marks a landmark event in the restructuring of the global electronic components supply chain.

Over the past decade, MLCC was a classic cyclical industry: demand recovery triggered universal expansion; price collapses led to collective destocking. Fluctuations followed inventory, volatility followed demand. The industry repeatedly consumed itself in low-price competition, with fragile profitability. This reflected homogeneous competition at the same technology level, with no player able to truly escape the cycle.

But 2026 will be the watershed.

Japanese and Korean manufacturers, through active contraction, have personally ended the old game of full-spectrum competition. They traded strategic retreat in low-end markets for absolute monopoly in high-end segments. They subtracted short-term capacity to add long-term value.

From now on, the MLCC industry will no longer have a single unified cycle—only stratified logic: high-end earns technology premiums, mid-to-low-end earns scale dividends, and sub-high-end earns substitution windows.

As the "rice" of the electronics industry, MLCC is the fundamental component of all electronic products. Its supply chain restructuring reflects the broader shift in global high-end manufacturing capacity: Japan and Korea hold the technology high ground; China occupies the scale hinterland. The sub-high-end gap being torn open in between is the necessary pass for Chinese manufacturing to transition from volume to quality.

For domestic Chinese MLCC companies, this is not a simple market share expansion. It is a historic turning point—from passively following cycles to actively defining the landscape.

What Japanese and Korean firms are ceding is not just orders, but a complete window for industrial upgrading: accumulate profits through scale, invest profits in R&D, break through barriers through R&D, and complete the leap from follower to peer through barrier breakthroughs.

The essence of a cycle is mean reversion. The essence of a landscape is path dependency.

When the old cycle ends and the new landscape solidifies, any latecomer seeking to break stratification will pay ten times the cost required today.

The second half of the MLCC industry is not just beginning—there is no time left for hesitation.

One missed step could permanently lock a company into the mid-to-low end, repeating the painful experience of the memory chip gap on MLCC.