MLCC Enters the "Long-Term Agreement Era": Samsung Electro-Mechanics Signs $200 Million Long-Term Supply Deal with a Tech Giant, Securing Supply Until 2027

Samsung Electro-Mechanics is steering its AI server MLCC business towards long-term supply agreements, a trend that is reshaping the supply and demand dynamics of this core electronic component.

According to reports, on July 23 Samsung Electro-Mechanics announced that the company had signed an MLCC supply contract worth 295.12 billion KRW (about $204 million) with a major global technology company, with the supply period covering the full year of 2027. The counterparty has not been disclosed due to a confidentiality agreement between both parties.

This marks the second consecutive month Samsung Electro-Mechanics has secured a large-scale order for AI server MLCCs, following an approximately 450 billion KRW deal in June. The total value of AI server MLCC contracts publicly announced this year has now reached 750 billion KRW (about $510 million). Including the approximately 1.5 trillion KRW long-term silicon capacitor supply contract signed in May, the cumulative total of AI server component supply agreements this year has already exceeded 2.25 trillion KRW (around $1.5 billion).

Samsung Electro-Mechanics President Chang Duck-hyun stated:

"This large-scale contract is a testament to the recognition of Samsung Electro-Mechanics' MLCC technology as a core component of AI infrastructure. Based on deep trust from our clients, we will accelerate the development of next-generation advanced products, build a stable supply chain, and lead the AI component market."

On the day the news was announced, Samsung Electro-Mechanics’ share price surged more than 8% intraday, hitting 1,475,000 KRW—a gain that outperformed other KOSPI index heavyweights such as Samsung Electronics and SK Hynix.

Consecutive Mega-Deals: AI Server MLCC Orders Accumulate Rapidly

The contract amount accounts for about 2.6% of Samsung Electro-Mechanics' consolidated revenue of 11.3145 trillion KRW last year. The supplied products are core high-performance MLCCs for clients’ AI servers and data center systems. In terms of timeline, the company’s AI server component orders this year are showing an obvious acceleration trend:

In May, the company signed a long-term silicon capacitor supply contract worth roughly 1.5 trillion KRW with a global client. In June, it signed an AI server MLCC supply deal worth about 450 billion KRW with a leading global tech company. This July contract further boosts the total publicly announced AI server MLCC contract amount this year to 750 billion KRW.

Industry observers noted that such frequent, large-scale, long-term MLCC supply contracts are rare in the sector. It marks a shift whereby MLCC—traditionally a component supplied mostly on short-term orders—is rapidly transitioning to long-term contracts driven by the demand from AI infrastructure.

MLCC is known as the "rice of the electronics industry," providing stable currents and voltage regulation for electronic circuits. In the context of AI servers, this strategic function is significantly magnified.

Compared to standard servers, AI servers require over ten times more MLCCs—each server rack can be equipped with up to 600,000 MLCC units.

At the same time, AI servers have extremely stringent specifications for MLCCs, requiring ultra-small size, ultra-high capacity designs, and reliability standards such as high temperature resistance, high voltage tolerance, and resistance to substrate warpage. The technical barriers are very high, and there are very few companies worldwide with actual large-scale supply capabilities.

As for silicon capacitors, these components are installed inside AI chip packages (including GPUs and high-bandwidth memory, HBM) to help stabilize power supplies, and their resistance is about one percent that of traditional MLCCs, offering outstanding performance advantages.

Samsung Electro-Mechanics maintains a global leading position in the AI server MLCC market, with a market share exceeding 40%. This market share advantage is considered the key support for the company’s continued attractiveness to major clients, and is also an important factor behind the significant surge in share price after the long-term silicon capacitor contract was announced in May.

Samsung Electro-Mechanics stated that it is currently in further discussions with several global clients regarding mid- to long-term MLCC supply plans, and aims to accelerate the transformation toward a high value-added product portfolio focused on industrial, automotive, and AI server applications by expanding long-term supply contracts, thereby solidifying stable demand for AI server MLCCs.