The consumer electronics sector is experiencing a remarkable resurgence in 2025, fueled by a combination of policy-driven incentives and rapid technological advancements. At the heart of this recovery is a shift in the market driven by the “trade-in for new” policy, which encourages consumers to exchange their older devices for newer models, boosting the replacement market. This policy, while fostering growth in consumer electronics, is also setting the stage for a significant increase in the demand for passive electronic components, especially multi-layer ceramic capacitors (MLCCs). Alongside this, the rapid expansion of industries like new energy vehicles (NEVs) and artificial intelligence (AI) is amplifying the need for these crucial components, further solidifying their place at the forefront of technological development.

A central factor contributing to the booming demand for electronic components is the rise in consumer interest spurred by the “trade-in for new” model. This approach incentivizes people to upgrade their devices more frequently, creating a growing demand for the passive electronic components integral to the function of a variety of devices. Capacitors, inductors, and resistors—three of the most common components—are seeing unprecedented consumption as a result of innovations in industries like NEVs and AI. However, while the demand for high-end passive components is on the rise within domestic markets, many of these components are still reliant on international suppliers. This dependency is driving a movement towards local production, which is further boosting the demand for domestically manufactured high-end components.

The increasing demand for NEVs and AI technologies is having a profound impact on the lifecycle of passive component needs. These sectors are not just amplifying the quantity of components required, but also changing the specifications of the components themselves. A prime example of this evolution can be seen in the automotive industry. As NEVs become more prevalent, the need for passive components, particularly MLCCs, has grown significantly. Traditional gasoline-powered vehicles typically require a relatively small number of capacitors, but NEVs, with their complex electronic systems, need approximately six times the number of MLCCs compared to their fossil-fuel counterparts. This shift in the requirements of the automotive sector represents a profound change in the demand for passive components, pushing manufacturers to innovate in order to meet these new needs.

Simultaneously, the AI sector is advancing at an equally impressive pace. As AI technology powers a wide array of devices—from servers to personal computers and smartphones—the energy demands for these systems have also soared. The increasing power requirements are putting traditional passive components, such as ferrite soft-magnetic inductors, to the test. These older technologies are now seen as insufficient for meeting the rigorous needs of modern AI applications. In response, newer technologies, like chip inductors that use metal soft magnetic powder as their core material, are gaining traction. These inductors are more efficient at handling the high energy requirements of AI systems, but they come with a higher level of complexity in production, making them harder to manufacture and more scarce on the market. As a result, their value continues to rise, and the companies that can master their production hold a significant competitive edge.

The accelerating demand for passive components is not limited to just the electronics inside vehicles and AI devices. The growing needs of NEVs and AI are also driving a surge in demand for upstream materials, such as ceramic and nickel powders, which are critical in the production of high-performance MLCCs. The rise in demand for these raw materials reflects the broader growth of the industries they support. Manufacturers are investing heavily in research and development to enhance the performance of these materials, as they are central to the production of high-quality MLCCs, which in turn are required by the burgeoning NEV and AI sectors. This dynamic underscores a broader trend in the electronics industry, where the growth of downstream sectors is directly influencing the development of upstream materials.

As the demand for passive components continues to grow, attention is increasingly turning to the companies that provide the essential raw materials for their production. These upstream suppliers play a crucial role in determining the performance of passive components and are integral to the success of the entire supply chain. With AI technologies advancing at a rapid pace, the need for high-end passive components will only continue to rise. Companies with significant integration in the supply chain, particularly those that can efficiently source and supply the raw materials required for MLCC production, are well-positioned to thrive in this growing market. The ability to meet the evolving performance requirements of AI-driven applications will be a key differentiator in the coming years, as these technologies continue to redefine the boundaries of what is possible in the electronics industry.

The intersection of consumer electronics, AI, and NEVs is creating a confluence of growth opportunities within the passive components sector. As these industries continue to evolve, the components that enable their success are becoming increasingly sophisticated. The demand for higher-quality materials and components is accelerating, presenting new challenges and opportunities for manufacturers and suppliers alike. The ability to innovate in response to these changing requirements will be crucial for companies seeking to maintain their competitive edge in an increasingly complex market.

Looking ahead, the growth of the NEV and AI sectors will likely continue to drive demand for passive electronic components. The rapid pace of technological advancement, combined with shifts in consumer behavior and policy initiatives, is creating an environment ripe for innovation and growth. Companies that can adapt to these changes, particularly those involved in the production of high-end passive components and the upstream materials that support them, will be well-positioned to capitalize on the opportunities presented by this evolving landscape.

In conclusion, the consumer electronics industry’s recovery, fueled by the “trade-in for new” policy and the expansion of sectors like NEVs and AI, is driving a significant surge in the demand for passive electronic components. As the specifications for these components evolve and the need for higher-performing materials intensifies, the entire supply chain is being reshaped. Companies that can meet the new demands of these sectors—particularly those involved in the production of raw materials for MLCCs—are poised to see significant growth. The journey ahead promises to be one of rapid technological advancement, but also one that requires innovation and adaptation in order to thrive.