China Galaxy Securities: AI and new energy drive high demand growth, MLCC opens new growth cycle.

China Galaxy Securities issued a research report stating that looking ahead, first, the use of MLCC in AI servers is expected to increase by more than 10 times. With the gradual increase in the penetration rate of AI, domestic leading technology in MLCC continues to advance, and is expected to benefit in the future. Second, the use of MLCC in new energy pure electric vehicles is 6 times that of gasoline vehicles, and with the upgrade of intelligent driving, domestic leading MLCC companies are expected to benefit. Third, high-end MLCC products and high-end electronic ceramic materials are dominated by Japan, South Korea, and the United States, with a large space for domestic substitution. The main points of China Galaxy Securities are as follows: AI emerging endpoint equipment MLCC is highly prosperous, AI servers driving industrial MLCC high growth According to Frost & Sullivan, the global market size of MLCC related to AI emerging endpoint equipment is expected to reach 14.68 billion yuan by 2029, with a CAGR of 54.5% from 2025 to 2029. The usage of MLCC in AI servers is about 8-12 times that of traditional general-purpose servers, with the MLCC usage of a 8-card AI training server on a single machine being about 48,000 pieces, and the MLCC usage of a flagship whole-machine cabinet AI server can exceed 440,000 pieces. The global market size of MLCC in AI servers is expected to reach 23.91 billion yuan by 2029, with a CAGR of 39.6% from 2025 to 2029. The demand for AI endpoint equipment and industrial MLCC is strong. New energy vehicles drive high growth in MLCC usage, promoting MLCC towards high-end upgrade The average usage of MLCC per electric vehicle has reached 18,000 pieces, which is 6 times the usage per gasoline vehicle. Automobile MLCC requires high reliability and durability. In 2025, Shanxi Guoxin Energy Corporation's automobile production and sales reached 16.26 million vehicles and 16.49 million vehicles respectively, with year-on-year growth rates of 29% and 28.2% respectively. The rapid growth in sales of new energy vehicles is driving the rapid growth in MLCC usage. According to Murata's documents for IRDay 2025, it is estimated that by the fiscal year 2027, the number of vehicles equipped with L2+ level advanced driving assistance systems will grow rapidly, with an estimated increase of about 2.8 times. The increase in the penetration rate of intelligent driving will significantly increase the usage of high-end MLCC. The company's products are applied in multiple scenarios in automobiles. These include MLCC, ceramic packaging bases, alumina ceramic substrates, electronic pastes, compressor wiring terminals, MLCI, ceramic blades, etc., with a high prosperity outlook in the medium to long term. Japanese and Korean manufacturers monopolize high-end MLCC, with large room for domestic substitution According to the prospectus of Chengdu Hongming Electronics, the global supply of MLCC is highly concentrated. In 2024, the market share of Murata in Japan was 31.8%, Samsung Electro-Mechanics (SEMCO) in Korea was 22.9%, Guangdong Fenghua Advanced Technology had a share of 1.9%, and MicroResist Technology had a share of 1.5%. According to the prospectus of Chaozhou Three-Circle (Group), the company's market share in the MLCC industry is about 2.1% in 2024. The Chinese MLCC market is dominated by Japanese and Korean manufacturers, with Murata and Samsung Electro-Mechanics together accounting for over 50% of the market share; high-end MLCC is monopolized by Japan and Korea. Chinese mainland manufacturers such as Chaozhou Three-Circle (Group), Guangdong Fenghua Advanced Technology, and MicroResist Technology are accelerating their rise, with a combined market share of 10.49%, providing a large space for domestic substitution. Japanese and American manufacturers dominate high-end ceramic materials, AI and automotive electronics drive long-term prosperity According to Frost & Sullivan, the global market size of core advanced electronic ceramic materials industry is expected to grow from 24.1 billion yuan in 2025 to 42.2 billion yuan in 2030, with a compound annual growth rate of 11.8%. Ceramic powder supply is dominated by Japanese and American manufacturers. Specifically, Japan's Kyocera accounts for 28%, Ferro in the United States accounts for 20%, and Japan's Chemic occupies 14%. Shandong Sinocera Functional Material holds a market share of 10% in China. The global supply of high-end ceramic powders is highly concentrated, with Japanese manufacturers accounting for approximately 75% of the supply. Future advanced electronic ceramic materials are expected to continue to benefit from the booming development of automotive electronics, AI data centers, and consumer electronics industries. Risk Warning: Risks of AI server demand falling short of expectations; risks of a decline in sales of new energy vehicles; risks of consumer electronics recovery falling short of expectations; risks of domestic substitution falling short of expectations; risks of accounts receivable recovery falling short of expectations.