Why Are Silicon Capacitors Becoming Important? And Why Is SEMCO's Stock Surging?
The reason silicon capacitors have failed to grow into a large market until now is clear. TSMC, which holds an overwhelming share in substrates for AI packaging, has historically sourced silicon capacitors in-house. As a result, it has been effectively impossible for silicon capacitor suppliers outside of TSMC to break into the AI packaging value chain.
But with the rise of Intel's EMIB, the situation is changing.
Silicon capacitor suppliers like Murata and SEMCO are now supplying silicon capacitors for Intel's EMIB, and have begun to benefit directly from AI demand.
The existing silicon capacitor market was effectively an oligopoly dominated by Murata and TSMC. SEMCO was closer to a latecomer.
Yet even SEMCO—the latecomer—has managed to land a supply contract worth more than $1 billion. For context, SEMCO's silicon capacitor revenue last year was a mere few million dollars.
So how did SEMCO ramp its revenue this quickly? It comes down to the fact that SEMCO is the only company in the world that operates both a silicon capacitor business and a substrate business.
The reason silicon capacitors have become important for Intel's EMIB is that Intel cannot make its own silicon capacitors and must source them externally. On top of that, within Intel's EMIB BoM, the highest value-added component is the substrate.
So if a company can deliver both the substrate and the silicon capacitor to Intel's EMIB on a turnkey basis, that maximizes SEMCO's bargaining power and value. This is precisely why SEMCO's stock has been surging recently.
Of course, this isn't to say Murata will benefit less. Murata still maintains a very close relationship with Ibiden—Intel's first-vendor for substrates—and is clearly positioned to benefit from EMIB. That said, my view is that the emergence of a new player like SEMCO should by no means be underestimated.