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Due to the increase in demand for AI data centers, Murata Manufacturing Co., Ltd. announced that it will invest 1 trillion yen over five years to expand production, attempt to double sales of capacitors, as well as raise its full-year profit forecast.
Murata Manufacturing Co Ltd will invest 1 trillion yen ($6.4 billion) over five years to more than double capacitor sales. The demand for such components among AI data center operators is reaching unprecedented levels.
Murata announced its financial report on Friday, not only raising its profit forecast for this fiscal year but also again expanding its production capacity investment plan. President Nori Nakajima has previously said the planned expansion of production is not enough to meet all orders. Murata’s revenue last quarter (to the end of September) reached 588.5 billion yen, and operating profit was 147.5 billion yen, much better than analysts expected.
Murata raised his operating profit forecast for this fiscal year to 520 billion yen, saying data center demand will drive sales and profitability.
Murata’s capacitors are used to control current and are used in everything from smartphones to automotive systems. The AI boom has put many basic but indispensable components in short supply, and capacitors are one of them. US hyperscale data center players are investing hundreds of billions of dollars in data center expansion, and so Murata’s production capacity is low. The high-level capacitors required by these industries must be small, durable, and capable of storing large amounts of electrical energy.
A recent report from TrendForce, a research organization, said: “The rapid development of AI applications from model training to inference and AI agents is driving a new wave of demand for CPUs. Each CPU needs to be equipped with a power module and DDR5 memory. As the use of these components increases, the demand for high-capacity multilayer ceramic capacitors (MLCC) in CPU motherboards and memory modules has also increased significantly.”
Nakajima said in an interview with Bloomberg this month that demand for Murata’s components is growing faster than a quarter ago and planned investments in production expansion are no longer enough. In addition to regular investments to increase production capacity by about 10% each year, Murata also announced in April that it would invest 80 billion yen over the next two years to increase production by another 15%.
Nakajima is now optimistic about expanding demand and long-term investment. His attitude is completely different from three months ago. At the time, he questioned the sustainability of AI investments due to the unclear financial situation of data center operators.
However, investors are concerned about funding to support the construction of AI data centers. His doubts have not gone away yet. However, supply chain players such as Murata are still focused on fulfilling orders from ultra-large-scale data center players.
Summary FAQ
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Murata Manufacturing plans to invest 1 trillion yen over the next five years, focusing on expanding capacitor production capacity, with capacitor sales expected to more than double to cope with the strong demand brought by AI data centers.
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To train and infer AI models, ultra-large-scale data centers continue to expand servers, power modules and memory equipment, resulting in a rapid increase in demand for higher capacity, higher durability and smaller size MLCCs, reducing Murata’s production capacity.
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Murata’s revenue and operating profit were both better than market expectations last quarter, and it raised its operating profit forecast for this fiscal year to 520 billion yen. The company said data center demand is driving significant improvement in sales and profitability.
