MLCC, the Next ETF Theme? ... A String of Launches Is in the Works

Kiwoom Leads with First Listing, Followed by Mirae Asset and NH-Amundi
MLCCs Benefit from AI-Driven Hardware Bottlenecks
MLCC-Themed Products Also Launch in Succession in the United States

MLCCs (multilayer ceramic capacitors) are rapidly emerging as a new theme in South Korea's exchange-traded fund (ETF) market. As bottlenecks in AI hardware extend to MLCCs and AI substrates, asset managers are bundling related companies into funds to capture gains from the market's rise.

According to the financial investment industry on October 16, Mirae Asset Global Investments plans to launch the "TIGER Global MLCC&Substrate" ETF on October 20. It has a total expense ratio of 0.49% and tracks the "Solactive-KEDI Global MLCC and Semiconductor Substrate" index. As of August 31, the index's largest holdings were Samsung Electro-Mechanics at 20.63%, Murata Manufacturing at 18.41%, Unimicron at 13.23%, and TDK at 12.27%. However, as the ETF has not yet been listed, its portfolio may change by the actual listing date.

Mirae Asset Global Investments said, "This product invests in global MLCC and substrate companies that have entered a virtuous cycle in which both P (average selling price) and Q (shipments) are surging, particularly due to the explosive growth in AI servers." It added, "The portfolio is composed of leading companies from South Korea, Japan, and Taiwan, which are driving this industry."

Kiwoom Asset Management previously launched South Korea's first MLCC ETF. Listed on October 13, the "KIWOOM Global MLCC&AI Substrate TOP4+" tracks the "iSelect Global MLCC&AI Substrate TOP4+" index and has a total expense ratio of 0.49%. Under the index methodology, 10 companies listed on global stock markets that are involved in MLCCs and AI semiconductor packaging substrates are selected. The index then allocates 80% of the portfolio to the four stocks with the highest keyword scores, assigning 25% each to the top two and 15% each to the third and fourth. The weights of the remaining six stocks are determined by their free-float market capitalizations. The ETF currently has the highest weighting in Samsung Electro-Mechanics among the relevant ETFs, with holdings including Murata Manufacturing at 26.42%, Samsung Electro-Mechanics at 23.86%, Taiyo Yuden at 17.41%, and LG Innotek at 10.72%.

Asset managers expect MLCCs and substrates to become central to AI hardware bottlenecks and are launching related products one after another. NH-Amundi Asset Management also plans to launch the "HANARO Samsung Electro-Mechanics-Focused AI Core Substrate" ETF in early November.

MLCCs are components that stabilize voltage in response to the instantaneous power demands of AI chips. AI servers used for training and inference require high-capacity MLCCs with more than 10 times the capacity of general-purpose products. Meanwhile, demand driven by AI has increased, and leading manufacturers are converting MLCC production lines to serve AI applications, further reducing the capacity available for general-purpose products. The top five companies hold 80% of the market: Murata Manufacturing (40%), Samsung Electro-Mechanics (23%), Taiyo Yuden (11%), TDK (7%), and Yageo (5%).

In the United States, MLCC-related ETFs have also launched one after another in the second half of this year. The "Tema MLCC & PowerSemi ETF (PSOX)," listed on August 17, combines power semiconductors and MLCCs to improve the power efficiency of AI servers and data centers. The "Roundhill MLCC & Electronic Components ETF (CCML)," launched in September, invests in the Asia-centered MLCC supply chain. The "Global X MLCC & Electronic Components ETF (MLCC)" is an actively managed fund that holds MLCC and electronic passive component companies. Most of these products have Murata Manufacturing and Samsung Electro-Mechanics among their top holdings.

Kim Jinyoung, a researcher at Kiwoom Securities, said, "(For MLCCs,) long lead times for manufacturing equipment and customer certification requirements are limiting the pace of capacity expansion, while rising demand has led to higher selling prices and improved sales mix, with a greater share of high-value-added products." He added, "Whereas AI investment in the past was concentrated in Nvidia and a few major tech companies, physical constraints arising from the process of building AI infrastructure—including memory, networking, power, cooling, and MLCCs—are now emerging as new investment targets."

This content was produced with the assistance of AI translation services.