Caitong Securities: MLCC's high-end demand volume for powder materials is expected to achieve structural upgrades

The Zhitong Finance App learned that Caitong Securities released a research report saying that traditional MLCC demand is showing structural upgrades, and demand for automobiles and AI is clearly driving the release of high-end products. Over the past 5 years, the global MLCC market has steadily increased. The total share of downstream consumer electronics products and other fields has reached 45%, and automobiles account for 18%. Along with product intelligence and miniaturization, the increase in unit value in the consumer sector supports a steady rise in traditional demand. Demand for downstream units in the automotive, AI and other fields has doubled, and demand for high-end MLCCs has doubled, forming a double increase in “volume+price”.

The main views of Caitong Securities are as follows:

The MLCC industry is clearly divided. Japanese and South Korean companies are at the top, and domestic companies are catching up with the second tier

Taking advantage of early accumulation and industrial chain advantages, Japanese and South Korean companies occupy the first tier. Domestic companies are rapidly expanding production capacity and continuing to invest in industrial chain layout and R&D. Some products have already been able to break through the blockade to achieve a small share of middle- and high-end supply, and catch up with the lead with a position in the second tier. According to data from the China Electronic Components Industry Association, the overall market share of Japanese companies reached a maximum of 54.5%, and MLCC manufacturers in mainland China accounted for about 9.2% of the global market share.

MLCC downstream differences extend to upstream powders, and MLCC powders lack high-end entry points in the early stages

MLCC powder performance is relatively important. After Japanese companies formed their own supply of upstream materials, the supply chain was relatively closed, making it difficult to enter under stable supply conditions. In addition to the powder sector, in the MLCC powder export market, 5 of the top 7 global manufacturers are from Japan. The top 3 companies in the MLCC powder market share 28%, 20%, and 14% of the market share of Japan's Sakai Chemical, American Ferro, and Nippon Chemical in that order. In recent years, leading domestic powder companies, such as Guocera Materials, have continued to catch up and supply MLCC manufacturers in South Korea and Taiwan. Following downstream customers breaking through the barriers of mid-tier products, they have begun to gradually switch into high-end powders.

Multiple factors such as high-end order spillover, supply chain localization, and rare earth control drive domestic powder materials companies to achieve structural upgrades

Similar to most industrial chains, MLCC powder and downstream development have complementary trends. This round of high-end demand continues to increase, and leading companies will have some order spillover after production is completed, which will drive upstream materials to follow to achieve product structure upgrades; and as one of the world's important AI camps, China is the main AI demand market. Under the general policy of insurance and supply, the domestic MLCC industry chain has begun to gain opportunities for high-end layout; it is estimated that the incremental supply of leading overseas powders will be limited in the future, which is conducive to selling some high-end domestic powder markets and speeding up the market for high-end domestic powder production Structural upgrade .

Risk warning: risk of downstream demand falling short of expectations; risk of capacity expansion exceeding expectations; risk of uncertainty in rare earth export policies; risk of fluctuating raw material prices; risk of rare earth inventory disturbance or increase in replacement channels.