Some personal insights on Fenghua Gaoke

Based on relevant data and the energy crisis in the Middle East affecting Japan and South Korea, I have some personal thoughts on Fenghua High-Tech; [Taoguba]

Below is my analysis framework after collecting data with AI, organized according to my own reasoning. This is just personal notes, not for reference. (Due to today’s market movements caused by Middle East issues and energy storage fluctuations, I am considering the impact on power and energy-intensive industries, especially AI-related sectors, driven by electricity shortages and domestic substitution opportunities, combined with actual price increases and expectations. This is not institutional advice.) The energy crisis from the Middle East is likely to impact Japan the fastest;

Japan and South Korea’s power structures, rising costs, shrinking supply, and MLCC price increases; Middle East disturbances accelerating new energy vehicle (NEV) production, leading to increased MLCC demand;

Core Expectations for Fenghua High-Tech

1. Key conclusion (overview) Fenghua High-Tech has entered the NVIDIA supply chain: indirectly supplying through Foxconn / Industrial Fulian, providing high-end high-capacity MLCC in bulk for NVIDIA’s GB200/GB300 AI servers. It has been certified, mass-produced, and shipments are stable. Japan and South Korea’s power reliance on LNG: power generation does not depend on crude oil, but natural gas accounts for a high proportion. Disruptions in the Hormuz Strait directly push up electricity prices, causing rigid increases in high-end manufacturing costs.

Rising costs in Japan and South Korea → inevitable supply contraction → further price hikes: Rigid demand for AI servers and NEV, energy pressure intensifies supply tightness and price increases, leading domestic leading companies to benefit directly.

Middle East energy disruptions → accelerated NEV expansion: Long-term high oil prices drive faster electrification. NEV MLCC usage is 6–10 times that of fuel vehicles. By 2026, global vehicle-grade MLCC demand will exceed 300 billion units, further widening industry supply-demand gaps.

Fenghua High-Tech has three major expectations: Market has not fully priced in NVIDIA supply chain + volume increase in NEV MLCC + price elasticity, making it the most underestimated dual-mainline AI + NEV stock currently.

2. Japan and South Korea’s power structure: Why will there be substantial impact?
3. Japan’s power structure (2025 official): LNG power generation: 34% (largest source), coal: 28%, nuclear: 12%, oil: only 1% (not a main power source).

Dependence on the Middle East: LNG imports about 20%, all via Hormuz; 95% of crude oil from the Middle East.

Conclusion: LNG supply cuts or price hikes → Japan’s electricity prices will jump directly. 2. Critical judgment: Japan and South Korea do not rely on crude oil for power generation but are highly dependent on LNG and coal, with the Middle East as the core source and transit route. Long-term disruptions in Hormuz → LNG supply contraction, gas prices doubling, electricity prices soaring. High-end manufacturing (storage, MLCC, semiconductor materials) is energy-intensive; a 10% increase in electricity costs compresses gross margins by 3–8%.

Japan and South Korea’s strategic reserves can only last 2–3 months, so long-term effects will be: Cost increases → supply contraction → further price hikes.

3. Rising costs in Japan and South Korea → supply contraction → further price hikes

4. Cost side: Rigid increases in LNG/oil prices → rising prices for rare earths, silver paste, ceramic powders, logistics, shipping, and insurance costs.

5. Supply side: Contraction inevitable. Major MLCC and storage manufacturers are at 90–95% capacity; no new capacity due to energy constraints → forced production cuts, delays, and extended lead times, further widening supply gaps for high-end AI and automotive-grade models.

6. Price side: Further price increases inevitable. Murata announced price hikes before end of March, with high-end MLCC increases of 15–25%. Samsung followed in April with double-digit increases. Taiwanese manufacturers have already raised prices and will continue to do so.

Conclusion: The global passive component industry will enter a super cycle of price increases in 2026.

4. Middle East energy disruptions → accelerated NEV expansion → increased MLCC demand (new core data)

5. Core logic: Long-term instability in Middle East energy → sustained high oil prices → increased fuel vehicle operating costs → global NEV capacity and sales accelerate → NEV MLCC usage is 6–10 times that of fuel vehicles → explosive growth in vehicle-grade MLCC demand.

6. NEV MLCC usage data (authoritative industry data): Traditional fuel vehicles: 3,000–5,000 units/vehicle; standard NEVs: 10,000–18,000 units/vehicle; L2+/L3 intelligent NEVs: 18,000–30,000 units/vehicle; 800V high-voltage platforms: high-voltage MLCC unit prices are 3–5 times lower-voltage, with higher value.

7. Global NEV sales and MLCC demand in 2026: Global NEV sales: 23.4 million units (TrendForce). Year-over-year growth: 14%. China NEV sales: 18.24 million units, penetration rate 57%. Average MLCC per vehicle: 18,000 units. Total global NEV MLCC demand in 2026: 23.4 million × 18,000 = 4.212 trillion units. Compared to 2025’s incremental demand: over 300 billion units of vehicle-grade MLCC. Market growth rate: 30–35%.

8. Impact on MLCC industry: Global annual demand for MLCC is about 50 trillion units; NEV share rapidly rising to 23% of high-end automotive-grade MLCC.

MLCC lead times are 16–20 weeks, with inventories at a 5-year low. Supply constraints from Japan and South Korea + explosive NEV demand will continue to widen supply-demand gaps.

5. Current MLCC price increases: magnitude, pace, expectations
6. Price increase magnitude: High-end AI/automotive-grade MLCC: spot +15–35%, contract +5–20%.

Fenghua High-Tech: two price hikes in Nov 2025 and Jan 2026, up to 30%. Lead time: 16–20 weeks (historical high). Inventory: at 5-year lows, with only 2–3 months of stock at factories.

2. Future price increase pace (2026): Q1: already up 10–20% Q2–Q3: further up 15–25% (driven by Murata and Samsung) Q4: high-level oscillation, another 5–10% increase Annual cumulative increase in high-end models: 30–40%.

3. Price increase drivers: AI server MLCC per unit: 30,000 units, 10–15 times that of standard servers; NEV per vehicle: 6–10 times that of fuel vehicles. In 2026, no new MLCC capacity globally; supply contraction in Japan and South Korea + rigid demand = prices easy to rise, hard to fall.

4. Is Fenghua High-Tech part of the NVIDIA supply chain?

5. Clear conclusion: Yes, it has entered, with indirect supply, mass shipments, and certification achieved. Channels: Foxconn / Industrial Fulian (NVIDIA server OEM). Products: AI servers, high-frequency high-capacity MLCC for HBM. Certification: achieved in Q3 2024, mass supply from Q4 2024. Position: the only domestic MLCC supplier directly supplying NVIDIA AI servers.

6. Core data: MLCC monthly capacity: 65 billion units. High-end production line utilization: over 95%. AI-related orders: 15–20%. Automotive-grade: AEC-Q200 certified, supplying BYD, GAC. Automotive electronics sales in 2025: up 39% YoY.

7. Fenghua High-Tech’s core expectations

8. The market still perceives it as a traditional component stock, not fully valuing the “NVIDIA AI chain + NEV volume increase” dual growth. Institutional coverage is limited; capital attention is low. The stock price does not fully reflect the dual incremental expectations of AI servers and NEV.

9. Underestimating the impact of “Japan and South Korea supply contraction + price hikes + NEV volume growth” on Fenghua: as Korea and Japan’s supply tightens, Fenghua’s market share expands, gross margins improve, leveraging cost advantages, domestic supply chain, and rare earths, leading to increased global competitiveness.

10. Performance elasticity is severely underestimated: a 30% increase in high-end MLCC prices directly translates into higher profits. The resonance of AI and NEV orders will ensure high performance growth in 2026.

11. Overall logical cycle (summary in one sentence): Middle East energy disruptions → Japan and South Korea LNG/electricity price hikes → rising costs → supply contraction → MLCC price hikes; simultaneously, high oil prices accelerate NEV expansion → surge in vehicle-grade MLCC demand; NVIDIA supply chain acceleration drives domestic substitution → Fenghua’s volume and price rise + expectation recovery = strongest beneficiary.

12. Risk warnings: Indirect supply chain, influenced by OEM procurement cycles; industry price wars; certification delays; Middle East situation easing or oil price decline causing short-term volatility.

Additional note: The only domestic direct supplier of NVIDIA AI server MLCC is Fenghua High-Tech, which is the only domestic manufacturer directly supplying NVIDIA GB200/GB300 via ODM. SanHuan Group is the exclusive domestic supplier of NVIDIA’s core ceramic substrates and participates indirectly in MLCC through major international manufacturers.

Logical cycle summary: Middle East disruptions + price hike cycle create dual opportunities for leading companies—Fenghua benefits directly from NVIDIA supply chain volume and price increases, driven by AI and NEV dual growth, with the highest performance elasticity. SanHuan, with material integration barriers, costs 20% lower than Japanese firms, and drives both substrates and MLCC, continuously gaining market share during supply tightness.