MLCC Market Polarizes in 1Q26 as Embodied AI Ignites High-End Demand While Consumer Electronics Slump Under Cost Pressures, Says TrendForce

According to TrendForce's latest findings, the global MLCC industry will show a more polarized landscape in 1Q26 due to ongoing political and economic turbulence. While the U.S. tariffs and escalating geopolitical risks continue to increase supply chain uncertainty, the market for high-end MLCCs is sharply rebounding, driven by the commercialization of embodied AI applications. In contrast, the mid- to low-end MLCC segments are struggling due to seasonal downturns and rising raw material costs, which dampen demand for traditional consumer electronics and increase operational challenges for manufacturers.

Demand for high-end MLCCs remains strong due to substantial investments in AI infrastructure, such as Nvidia's GB200/300 servers, and aggressive ASIC development by leading CSPs, including AWS and Google. This has resulted in high-capacity utilization at Japanese and Korean suppliers, with Murata, SEMCO, and Taiyo Yuden all operating above 80%. Murata, especially, benefits from controlling critical materials for advanced packaging and anticipates a 20–25% QoQ increase in high-end MLCC orders in 1Q26, ensuring their production lines stay fully utilized.
 
TrendForce notes that 2026 is seen as the debut of embodied AI, with uses rapidly spreading from cloud servers to robots, autonomous vehicles, and smart glasses. Among these, lightweight smart glasses are becoming a key demand driver, increasingly integrating ultra-small 01005 MLCCs (0.4 × 0.2 mm), with each device needing around 150–200 units.

In stark contrast to the buoyant demand for AI, the smartphone, notebook, and automotive markets remain sluggish. As a result, Taiwanese and Chinese MLCC suppliers that primarily focus on consumer-grade products have turned more conservative in their operations. Order momentum has remained weak since the fourth quarter of 2025, and the traditional pre–Lunar New Year stockpiling cycle has largely disappeared. 

Notebook-focused ODMs like Compal and Pegatron have restricted their material procurement, resulting in January MLCC orders decreasing by 5–6% MoM. Capacity utilization at Taiwanese and Chinese MLCC manufacturers remains steady at around 60–70%, with inventory levels holding between 60 and 75 days. Some suppliers are even decreasing production to stabilize prices.

Meanwhile, international metal prices keep reaching new highs, driving up costs in the passive components industry. Items with higher silver and copper content, like ferrite beads and resistors, have already experienced price increases of 15–20%. MLCCs have lower copper content, which helps keep their costs more manageable and restricts suppliers from fully passing on the broader price increases—leading to mostly stable MLCC prices.

Additionally, the strong demand for AI-related orders is diverting resources from other important parts, such as consumer memory and PCBs. This situation is causing PC and smartphone manufacturers to face component shortages and increased prices, which could result in higher final product costs and reduced consumer demand.

TrendForce concludes that the supply chain in 1Q26 will be characterized by a two-track market, in which AI thrives while consumer electronics stagnate. To navigate this environment, suppliers must actively expand their presence in high-end AI applications while tightly controlling inventory and cost risks in traditional segments, as market conditions grow increasingly challenging.

For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email the Sales Department at SR_MI@trendforce.com

For additional insights from TrendForce analysts on the latest tech industry news, trends, and forecasts, please visit https://www.trendforce.com/news/