Samsung Electro-Mechanics (009150.KS) will supply 290 billion won ($210 million) worth of multilayer ceramic capacitors for artificial intelligence servers to a large global company. The deal is the company's fifth long-term agreement for MLCCs this year, bringing cumulative contracts to 2.4 trillion won.
Samsung Electro-Mechanics said on the 6th that it had signed the $210 million supply contract for AI server MLCCs with a large global company. The supply period runs for one year, from Jan. 1 to Dec. 31 next year.
MLCCs store electricity briefly and release it at a steady rate when semiconductors need it. They work much like a dam that holds back water during heavy rain and releases it little by little when needed. They also keep electrical signals passing between components from interfering with one another. Smaller than a grain of rice, they go into most electronic products, including smartphones, cars and servers, earning them the nickname "the rice of the electronics industry."
MLCCs for AI servers face far tougher technical requirements than standard products. Because AI servers run around the clock in high-temperature, high-voltage conditions, the capacitors must store more electricity while operating reliably for long periods.
An AI server uses more than 10 times as many MLCCs as a conventional server. A single server rack can carry up to 600,000 of them. They must also withstand bending of the circuit board without cracking, leaving only a handful of suppliers able to deliver them.
Samsung Electro-Mechanics has won a string of long-term supply agreements for AI server MLCCs this year. The latest follows deals worth 454 billion won in June, 295.1 billion won in July, and 1.07 trillion won and 285 billion won, including inductors, in September. The cumulative total of 2.4 trillion won exceeds one-fifth of the company's consolidated annual revenue of 11.31 trillion won last year.
The market for AI server MLCCs is expected to grow to $5.8 billion by 2030 from $1.4 billion last year, according to Goldman Sachs. That would more than quadruple the market in five years. Samsung Electro-Mechanics holds more than 40% of the market.
The company currently has long-term MLCC supply agreements with about 10 global customers and is in talks with several others on additional deals.
"Customer demands for high-performance MLCCs continue to rise along with the growth of the AI market," an official at Samsung Electro-Mechanics said. "Based on differentiated technology and stable supply, we will expand the share of MLCC products for AI applications and further strengthen our competitiveness in the global market."
