AI set to boost Taiwan's passive component industry: Analyst

Taipei, Oct. 29 (CNA) An Industrial Technology Research Institute (ITRI) industry analyst said Tuesday that Taiwan's passive component industry is expected to grow 11.1 percent in 2024, with another 6.3 percent growth next year.

Hsiao Jui-chung (蕭睿中), an analyst at the government-sponsored institute's Industry, Science and Technology International Strategy Center, said at a seminar on industrial trends it is estimated the production value of the passive components industry will grow from NT$217.8 billion (US$6.78 billion) in 2023 to NT$242 billion in 2024.

The main reason for the growth is the strong recovery of related industries, namely artificial intelligence (AI) servers and AI terminals, high demand for which boosted the industry's strong showing, with the market for its main products seeing positive growth in the third quarter, Hsiao said.

The industry's inventory reached a safe level in the second quarter, with capacity utilization rates for standard products and high-end niche products expected to increase 5-10 percent in the second half of the year, Hsiao predicted.

Export values have also grown year-on-year, with every month seeing higher numbers except for February, the month when the Lunar New Year took place.

Market dependency and exports to China have fallen, due to the tech war between the U.S. and China, as well as the trend for electric manufacturers to distribute manufacturing, said Hsiao.

Looking to the future, Hsiao predicted that the production value of the industry will grow 6.3 percent in 2025 to NT$257.1 billion, driven by AI computers, smartphones and niche components for vehicle use.

Passive components for vehicle use made up about 17 percent of the industry's revenue in 2023, with the proportion expected to rise to 20 percent in 2024, Hsiao said.

World-wide demand for vehicle-use multi-layer ceramic capacitors (MLCC) could reach 450 billion units this year, and may increase to 500 billion next year, he said.

Regarding AI computers, an AI laptop needs 200 more MLCCs than a regular laptop on average, in order to adapt to the higher specifications in its processor and memory, said Hsiao.