The Booming Business Opportunity of Passive Electronic Components Driven by AI

2024-12-29

With the rapid development of AI technology, its far-reaching impact permeates various industries, and the electronics sector stands out prominently. AI systems, ranging from data centers to edge computing devices, demand high-performance electronic circuitry, which in turn fuels the consumption of passive electronic components.

In data centers, the backbone of AI computing power, servers are constantly upgraded to handle massive data processing. Capacitors and inductors are essential for power supply modules to ensure stable current and filter out interference, meeting the stringent power quality requirements of AI chips. Their usage has seen a significant uptick, with an estimated growth rate of over 20% annually in recent years, Industry sources said.

On the consumer electronics front, AI-enabled smart devices like smartphones and wearables are becoming ubiquitous. These compact gadgets integrate a multitude of passive components. For example, multilayer ceramic capacitors (MLCCs) are used copiously to support the complex circuitry handling functions like voice recognition and image processing. Market surveys suggest that the demand for MLCCs has tripled in the past five years due to the proliferation of AI features in consumer electronics.

Moreover, the automotive industry's transformation towards autonomous driving, powered by AI algorithms, is another major driver. Electronic control units (ECUs) in vehicles rely on precision resistors, capacitors, and inductors. As per a recent automotive electronics report, the value of passive components used per vehicle is projected to increase by 50% by 2025 compared to traditional vehicles, owing to advanced driver-assistance systems (ADAS) and autonomous driving functions.

From the application field, in terms of automotive use, in the past, a traditional car used about 1,000 to 2,000 passive components. When entering electric vehicles or autonomous driving, it is estimated that 5,000 to 10,000 passive components will be used, and the demand will grow at a double speed.

In terms of AI PC, research firm Canalys estimates that by 2028, AI PC shipments will reach 200 million units, with an annual compound growth rate of up to 44%. The average use of multilayer ceramic capacitors (MLCC) per AI PC will increase by 80% compared with traditional PCs.

Applications such as AI high-end servers, cloud computing and data centers have driven the demand for high-performance computing switches, and the use of inductors for high-wattage power supplies has more than doubled.

AI is widely used, and business opportunities are gradually fermenting. In the process of landing terminal products in the cloud, the design of electronic product systems will be changed, especially in the improvement of specifications, which will become a key factor in driving output value and technology growth. Among them, passive components have also benefited from AI applications. In addition to product specification upgrades, the quantity and price have also increased significantly, allowing the passive component industry to grow quarter by quarter since 2024 and return to the growth track.

The further expansion of demand areas not only quickly reduces backlogs of inventory, but also directly drives industry output value.

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