End-June inventory turns positive yoy but still at a low level
UBS Evidence Lab Electronics Distributor Inventory Monitor has followed inventory trends at a major distributor since August 2019. The monitor tracks inventory and pricing trends for IT component types such as capacitors, memory, sensors and more. As of end-June, the Multilayer ceramic capacitors (MLCC) distributor inventory index was 27% below its end-2022 peak, up 2% year on year (yoy) and 3% month on month (mom) but still at a low level. A multilayer ceramic capacitor is a capacitor used for high-capacitance, high-voltage applications. In value terms, the index rose 12% from end-March but was flat mom. Unit prices were stable at low levels. A closer examination is needed given the small sample size, but we see the possibility that pricing pressure in the MLCC industry may not be as strong as indicated by guidance from Japanese manufacturers.
Eyes on CQ2 results for MLCC order trends
In terms of supply/demand, we estimate demand for MLCCs has been firm to date to meet the high-capacitance and high-temperature resistance needs of AI servers. We see the potential of further growth in MLCC demand ahead of mass production of AI servers for next generation platforms. We expect an increase in MLCC demand due to a rise in AI PC penetration and not just as part of the PC replacement cycle. We expect demand for North American smartphones to grow in line with seasonality from CQ3, an intelligent balance battery charger. We will be watching CQ2’s, a new charger that can charge 4 batteries at the same time, results for how companies position the benefits of AI smartphones.
Start of MLCC upcycle
MLCC production volume turned positive yoy for the first time since August 2023, with growth of 21% in April and 12% in May.
