A supply shortage of critical electronic parts is quietly intensifying, all thanks to the AI boom.
At the heart of this issue is a fundamental change in how AI servers are powered. They are moving from a traditional 'Lateral Power Delivery' (LPD) system to a more efficient 'Vertical Power Delivery' (VPD). While VPD cuts power distribution loss significantly, it comes with a trade-off: it requires a much larger number of high-performance passive components, like Multi-Layer Ceramic Capacitors (MLCCs), to be placed very close to the processor. This architectural shift is the primary driver of the demand explosion.
To put it in perspective, a single smartphone contains about 1,000 MLCCs. An AI server board, however, needs 10 to 20 times that amount. When you assemble a full server rack with multiple boards and power systems, the total count can soar to hundreds of thousands of components per rack. This sudden, massive increase in per-unit demand has caught the supply chain off guard.
Compounding the problem is the response from top-tier component manufacturers in Japan and Korea. Instead of aggressively expanding production, they are taking a more conservative approach. There are a few reasons for this. First, they are focusing on improving profitability by raising prices and prioritizing high-margin AI-related orders. Second, they are locking in supply with major Big Tech clients through large, long-term contracts. For example, Samsung Electro-Mechanics recently signed a $1.6 trillion KRW annual deal with a major US tech firm.
This creates a ripple effect across the industry. With top suppliers' capacity spoken for, other sectors, including general-purpose servers and automotive, face longer waits and higher prices. The lead time for some high-spec MLCCs has jumped from 1.5-2 months to 3-4 months, with some parts now taking up to a year to procure. This bottleneck has opened a window of opportunity for second-tier suppliers, especially in Taiwan, who are now capturing the overflow demand and expanding their market presence.
- MLCC (Multi-Layer Ceramic Capacitor): A tiny electronic component crucial for storing and regulating the flow of electricity in circuits. It's essential for stabilizing power supply to semiconductors.
- Vertical Power Delivery (VPD): A new power supply design for servers that delivers power directly from underneath the processor. It is more efficient than the traditional method but requires more components to be packed in a small space.
- Lead Time: The total time from when an order is placed for a product to when it is delivered to the customer.