Passive components are part of a classic cyclical electronic components industry, with business conditions typically influenced by factors such as end-market demand, inventory levels, capacity utilization, raw material prices, and supply chain adjustments. However, as AI servers significantly increase computing density, power consumption, and high-speed data transmission requirements, the demands for power stability and signal integrity are also rising. As a result, the supply-demand dynamics of the passive components industry are undergoing a structural transformation.
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Demand Side: AI Server Upgrades Drive Higher Value and Consumption of Passive Components
Passive components are widely used in various electronic products. Looking ahead to end-market demand trends in 2026, traditional consumer electronics such as smartphones and PCs are expected to see limited growth, with overall demand remaining flat or even declining. In contrast, servers are benefiting from continued AI infrastructure investments by cloud service providers (CSPs), maintaining strong demand growth and becoming the most significant structural growth driver for the passive components industry in 2026.
In particular, as AI computing platforms evolve from NVIDIA's Hopper architecture to the Vera Rubin platform, and major CSPs actively advance customized high-end ASIC projects, passive components used in AI servers are entering a new generation of structural upgrades. From a rack-level perspective, the value of passive components in a traditional server rack is typically around US$1,000–1,500. However, with the introduction of NVIDIA GB200 and GB300 NVL72 architectures featuring high-power GPUs, HBM, high-speed switches, and liquid cooling systems, the passive component value per rack has increased to approximately US$2,500–3,500. Looking ahead to the Vera Rubin platform, further upgrades in GPU power consumption, HBM4 bandwidth, and rack-level power delivery specifications are expected to push passive component value per rack beyond US$5,000–6,500. This highlights how passive components are no longer merely low-cost supporting parts but have become key beneficiaries of AI server specification upgrades.
| Hopper | Blackwell | Blackwell | Rubin | |
|---|---|---|---|---|
| H100 | GB200 | GB300 | VR NVL72 | |
| Launch Timing | 2022 | 1Q25 | 3Q25 | 2H26 |
| Single GPU Power Consumption | 700 W | 1,200 W | 1,400 W | 2,300 W |
| Rack Power Consumption | 20–25 kW | 120 kW | 150 kW | 200 kW+ |
| Passive Component Value per Rack | Approx. US$1,000–1,500 | Approx. US$2,500 | Approx. US$3,500 | Approx. US$5,000–6,500 |
Table 1: AI Server Specifications and Passive Component Value
Source: NVIDIA, SemiAnalysis, CTBC Securities
Supply Side: Price Increases and Longer Lead Times Persist, with Limited Near-Term Relief
Slow Capacity Expansion for High-End Products
As both AI servers and automotive electronics accelerate the adoption of high-end passive components, major global suppliers are increasingly facing supply-demand imbalances in premium products. Leading MLCC manufacturers Murata Manufacturing and Samsung Electro-Mechanics are currently operating at utilization rates above 90%. Although new capacity came online last year, Murata has indicated that current demand is roughly twice its existing production capacity. Additional expansion projects are not expected to begin production until early 2027 at the earliest, making meaningful short-term supply relief unlikely.
Distributor data further confirms the tight supply-demand conditions in the passive component market. Lead times for MLCCs from Murata and Yageo continue to extend, with Yageo's lead times increasing significantly from around four weeks to 22–24 weeks. While this remains below Murata's pandemic-era peak lead times of 30–33 weeks, it suggests that the industry is entering another period of supply tightness.
Capacity Crowding-Out Effect in Low-End Products
Beyond supply shortages in high-end products, lower-end passive components are also experiencing a capacity crowding-out effect similar to what has been seen in the memory industry. In recent years, major global suppliers have prioritized limited capital expenditures, equipment investments, and R&D resources toward higher-margin segments such as AI, automotive, and advanced industrial applications, rather than expanding production capacity for standard low- and mid-range products. Some manufacturers have even planned to discontinue certain lower-end products and redirect capacity toward premium offerings.
Under these circumstances, suppliers focused on low- and mid-range passive components may benefit from order transfers. However, because the market underestimated the speed of demand recovery and new capacity still requires time to ramp up, supply for low- and mid-range products is also becoming increasingly constrained. This is further improving overall industry supply-demand conditions and supporting higher pricing.
Supply-Demand Imbalance Pushes the Passive Components Industry into a Seller's Market
Driven by both supply shortages and rising demand, major global passive component manufacturers have begun implementing price increases. In addition to Murata raising prices by 15%–35% in April, key suppliers including Samsung Electro-Mechanics, Yageo, and Taiyo Yuden have also followed with price adjustments. This reflects how supply-demand imbalances and extended lead times in high-end products are gradually being passed through to pricing. Overall, the passive components market has shifted from a buyer-driven inventory cycle to a seller's market with significantly stronger supplier pricing power.
Japanese and Korean Companies Continue to Dominate the High-End Market
The passive components industry encompasses a wide range of products and participants. However, high-end products have traditionally been dominated by Japanese and Korean manufacturers due to high technological barriers, stringent yield requirements, lengthy customer qualification cycles, and strong integration with customer product designs.
Among major players, Murata is the global leader in MLCCs, with strengths in high-capacitance, miniature, and automotive-grade products. TDK maintains deep technological expertise in magnetic components, inductors, and advanced automotive applications. Samsung Electro-Mechanics and Taiyo Yuden are also highly competitive in premium MLCCs and miniaturized components.
In addition, Yageo has gradually expanded into the high-end market through acquisitions and product portfolio upgrades. The company is a global leader in tantalum capacitors and ranks among the world's leading MLCC suppliers by market share. Overall, Japanese and Korean companies continue to control key technologies and customer relationships in the high-end passive component market, while Yageo stands out as one of the few Taiwanese companies that has successfully penetrated this segment.
Taiwanese Companies Compete in the Low- and Mid-End Markets Through Cost Advantages
Compared with Japanese and Korean manufacturers that dominate the high-end market, Taiwanese companies generally leverage cost control, manufacturing efficiency, and competitive pricing to target low- and mid-range as well as standard product segments.
Taiwan's passive component supply chain is well developed, with companies broadly categorized into diversified product suppliers and specialized niche players. In addition to Yageo's expansion into high-end products through acquisitions and portfolio upgrades, companies such as Walsin Technology and PDC (Prosperity Dielectrics Co.) offer multiple product categories including capacitors, resistors, and inductors, providing more comprehensive product portfolios.
Meanwhile, Lelon Electronics, APAQ Technology, and Trio Technology focus on specific segments such as aluminum electrolytic capacitors, solid-state capacitors, and inductors, offering specialized component solutions. In addition, Nichidenbo Corporation and Honey Hope Honesty serve as distribution channel partners, helping connect downstream customer demand with supply chain management.
Overall, while Taiwanese manufacturers still trail international leaders in certain high-end technologies, they possess advantages in pricing flexibility, lead-time responsiveness, and local supply chain support. As Japanese and Korean suppliers allocate more capacity toward premium products, Taiwanese companies are well positioned to capture additional demand for standard low- and mid-range components.
| Category | Company |
|---|---|
| Diversified Products | Yageo (2327.TW), Walsin Technology (2492.TW), Prosperity Dielectrics (6173.TW) |
| Capacitors | Lelon Electronics (2472.TW), Holy Stone Enterprise (3026.TW), Chinsan Electronic (8042.TW) |
| Resistors | TA-I Technology (2478.TW) |
| Inductors | TAI-TECH (3357.TW), Trio Technology (6862.TW) |
| Distributors | Nichidenbo (3090.TW), Honey Hope Honesty (8043.TW) |
Table 2: Selected Taiwanese Passive Component Manufacturers
Source: Compiled by the author
Key Taiwanese Passive Component Companies
Yageo Corporation (2327.TW)
Yageo is Taiwan's leading passive component manufacturer and one of the world's largest suppliers of passive components. Its product portfolio spans MLCCs, chip resistors, tantalum capacitors, inductors, and magnetic components, providing comprehensive one-stop electronic component solutions.
Its core strengths stem from a broad product portfolio and global footprint. On one hand, Yageo holds a leading position in tantalum capacitors and ranks among the top global suppliers of MLCCs and inductors, allowing it to benefit from improving demand across multiple product categories. On the other hand, the company has expanded its product offerings and geographic reach through long-term acquisitions, building a global manufacturing and sales platform across Asia, Europe, and the Americas. It also leverages existing customer relationships and distribution channels to increase design-in opportunities and cross-selling benefits.
Looking ahead to 2026, Yageo is expected to benefit from surging demand and widening supply gaps across the passive components industry. Supported by its comprehensive product portfolio, global manufacturing footprint, acquisition integration capabilities, and strong market positions in core passive components, the company is gradually evolving from a traditional cyclical passive component supplier into a diversified platform business. As AI-related demand expands and industry supply remains tight, Yageo is positioned to benefit from product mix optimization, higher utilization rates, and stronger pricing power, supporting continued growth in revenue and profitability while reinforcing its status as a key global passive component supplier.
Holy Stone Enterprise (3026.TW)
Holy Stone is a niche Taiwanese supplier specializing in high-voltage, large-size MLCCs. The company focuses on high-power, high-voltage, and large-form-factor products and maintains a technological edge in Class 1 NP0 MLCCs. It has already achieved mass production of 33nF 1,000V products and has entered the AI server power supply unit (PSU) supply chain. Given the stringent reliability requirements and lengthy qualification cycles associated with AI power systems, customers are generally less willing to switch suppliers, helping strengthen Holy Stone's market position.
Looking toward 2026, increasing AI server power consumption and evolving power architectures are expected to drive demand for high-voltage, large-size NP0 MLCCs. As the GB200, GB300, and Vera Rubin platforms advance, higher-wattage PSUs and future HVDC architectures will increase both component usage and specification requirements. Holy Stone is expected to benefit from growing AI adoption and the higher average selling prices (ASPs) of premium products, while ongoing capacity expansion should support continued revenue and earnings growth.
Conclusion
The passive components industry is transitioning from a market driven primarily by economic cycles and inventory adjustments to one supported by structural growth fueled by AI server specification upgrades.
As demand rises rapidly while supply remains constrained, longer lead times and price increases are becoming increasingly evident, significantly improving industry pricing power.
Looking ahead, the high-end market is expected to remain dominated by Japanese and Korean manufacturers, while Taiwanese companies with exposure to premium products, such as Yageo, are also likely to benefit. In the low- and mid-range segments, Taiwanese suppliers may capture additional orders resulting from capacity reallocations by major global players. Overall, the current growth cycle is not merely an inventory restocking story but a structural opportunity driven by expanding AI demand, product specification upgrades, and a reallocation of industry supply.
