Automotive and AI: Two Industries Fuel the Capacitor Boom

As the cost of capacitors reflects a supply shortage and an exponential increase in demand, it has become clear that AI’s evolution will naturally put pressure on this industry, and perhaps on many other component supply chains. This may impact how companies manage their inventories and remain agile in the volatile market. 

While engineers and procurement teams must fathom a way through these constraints, they can manage the risks that will ensue. By controlling their response to AI as it continues to evolve, and as obsolescence becomes more frequent, they can make more informed decisions with the help of Octopart.

Key Takeaways

• AI and automotive are driving unprecedented demand for capacitors. The rapid growth of AI infrastructure and increasingly complex, AI-powered vehicles has significantly increased the number and performance requirements of capacitors.
• EVs massively amplify component usage. Modern electric vehicles can require over 22,000 MLCCs, driven by technologies like ADAS, V2X, and 800V architectures, creating intense upstream pressure on supply.
• Supply chain constraints are tightening and pushing prices up. Shortages of key raw materials (e.g., barium titanate, nickel, tantalum) combined with high-spec production demands are driving up prices and limiting availability.
• Companies must shift to proactive, risk-aware sourcing strategies. Engineers and procurement teams need to focus on agility and obsolescence management, using tools like Octopart to make smarter sourcing decisions.

Capacitor Demand Grows in the Automotive Sector

The global push to reduce emissions has led to an overwhelming influx in demand for new-energy vehicles. Electric vehicles (EVs) became the talk of the decade for their ability to reduce dependence on fossil fuels. The ripple effect of EV demand is the upstream pressure on capacitor supplies, as a single vehicle may contain as many as 22,000 multilayer ceramic capacitors (MLCCs) of varying sizes. 

The increase in the number of capacitors in each vehicle is a result of more complex and AI-powered systems in cars, including: 

• Advanced Driver Assistance Systems (ADAS): Cars are equipped with AI that analyzes data from cameras, radar sensors, and light detection and radar (LIDAR). This enables lane assist, adaptive cruise control, hazard perception, and steering support – capabilities that are progressively converging toward fully autonomous driving.
• Vehicle-to-Everything (V2X) Technology: From Vehicle-to-Vehicle (V2V) data sharing to connectivity with broader infrastructure, cars are equipped with functions similar to those in mobile devices. 

In recent years, the focus has shifted as new vehicles are increasingly equipped with in-built AI servers to manage the vast amounts of data generated both within the vehicle and from its surroundings. These systems require a larger quantity of decoupling capacitors, particularly as OEMs now equip their cars with 800-volt batteries to enable energy savings, mileage gains, and technological enhancements. 

However, this shift in priorities within the automotive industry, placing AI at the heart of new-energy vehicles, comes with some caveats. As with any evolving technology, the faster it evolves, the more frequent cases of component obsolescence. 

The AI Boom Hikes Capacitor Demand

Following the 34% drop in 2023, the capacitor segment is experiencing a “structural tightening” as it struggles to keep pace with the flourishing AI industry. While automotive electrification remains a primary driver, it represents only one facet of AI’s far-reaching influence. 

The demand for high-performance capacitors now spans every major sector: from industrial energy (real-time grid analysis) and agriculture (autonomous vehicle operation and crop management) to manufacturing (lean production) and healthcare (personalized care delivery). 

The surge is fundamentally reshaping market dynamics. As AI pushes for extreme miniaturization and high power density, component prices are rising in tandem with the complexity of their production. Furthermore, sustainability initiatives place capacitors at the center of the green transition, as AI-optimized renewable networks and EV expansion rely entirely on these components to efficiently manage high-power exchanges. This intersection of massive demand and specialized requirements has placed the global supply chain under significant pressure. 

Current State of the Capacitor Supply Chain

High-end MLCCs are in high demand and cost-effective due to their high-capacitance and high-voltage capabilities. They meet engineers' need to minimize heat waste in compact boards by lowering ESR. However, this demand is growing exponentially as their purchase price doubles. Based on the trajectory of AI’s growth, industries expect the price of capacitors to follow suit over the next four years. 

A shortage in aluminium foils, barium titanate (core dielectric material), polypropylene (and other plastic films), nickel, and copper plays a major role in driving up the price of the most commonly used capacitors for AI applications. 

• MLCCs: Essential for power management due to their high stability and low ESR; however, high-demand “AI-grade” versions are seeing price hikes of up to 20% along with reduced supply. 
• Tantalum and Polymer: These high-density, ultra-reliable components are critical for AI server power rails. Increased demand, instigated by a shortage of tantalum powder, has triggered structural price rallies and a move toward strategic stockpiling to avoid supply gaps.
• Electrolytic and Film: Electrolytics manage large load spikes in GPUs and EVs, while film capacitors handle high-voltage filtering in robotics. Both are seeing firming prices driven by rising raw material costs and the expansion of AI-enabled infrastructure. 

As supply chains experience this same squeeze, their approach to supplier and inventory management will be the deciding factor in their ability to keep up with technological evolution. This means reevaluating their supplier management methods, ensuring supply agreements with critical providers, diversifying their component options, and maximizing their use of inventories.

While supply chain and procurement managers may want to consider “just-in-case” as their inventory management strategy, it is also worth noting how rapidly things are changing. The immediate response to supply reduction might be to stockpile what they can, but AI demands agility, the ability to foresee obsolescence and factor this into long-term procurement decisions. 

Staying Ahead of Capacitor Supply Shifts

Engineers and procurement leaders may not be able to offset rising capacitor costs through sourcing alone, but there is an alternative approach that can mitigate unnecessary expenditure. 

Teams can focus their attention on future-proofing their supply chains, improving their awareness of obsolescence, and refining how they manage their inventories. This is where Octopart proves itself to be more than just a component price comparison tool. Users can anticipate when capacitors are nearing discontinuation and quickly identify alternates.

Try Octopart today and keep your next project on track – with smarter research and sourcing from day one →

Frequently Asked Questions

Why are MLCC prices rising if production capacity has increased?

While capacity is growing, the type of demand has changed. AI and 800V EVs require high-spec, high-voltage components that take longer to manufacture and have lower yields than standard consumer-grade capacitors. 

Why is AI causing a capacitor shortage?

The “AI boom” requires massive data processing power, which relies on high-density power delivery. AI servers and accelerators require significantly more capacitors per unit than traditional servers to manage heat and maintain stability. This surge in demand, combined with raw material shortages of nickel and tantalum powder, has created a “structural tightening” where production cannot keep pace with AI infrastructure builds. 

How many capacitors do electric vehicles need?

The shift in capacitor supply and demand can be felt in the automotive sector. The average internal combustion engine (ICE) vehicle uses between 3,000 and 5,000 capacitors, while EVs soak up in excess of 22,000 MLCCs. As a result, suppliers are dealing with a minimum five-fold growth in the number of these components required by the industry to enable AI-powered systems in cars.