Chaozhou Three-circle (Group), a manufacturer of ceramics and electronic components from Guangdong, demonstrated strong results in the first half of the year, driven by a sharp increase in demand for multilayer ceramic capacitors (MLCCs). These tiny components, sometimes referred to as the 'rice of the electronics industry,' are now fundamental to artificial intelligence servers.
The company's history dates back to 1969 in a bamboo workshop in Chaozhou, when a young worker was trained in carbon film resistor technology. Investments in two Soviet resistors initiated the business of producing materials and components. For the first half of the year, the company reported revenue of 6.42 billion yuan, a 54.8% increase compared to the previous year, while net profit attributable to shareholders rose by 56.2% to 1.93 billion yuan. Adjusted net profit grew even faster—by 69.7%, indicating that the surge in demand originated from the company's core business area amid rising capacity utilization.
The main driver of this growth is the wave of AI computing moving up the supply chain. Standard AI servers utilize tens of thousands of MLCCs, and as international enterprises prioritize more expensive, high-capacitance parts, the premium market has become more competitive. Three-circle, one of the few domestic players covering the entire cycle from ceramic powder to finished components, has increased the production of high-capacitance MLCCs and is a global leader in manufacturing optical-communication ceramic ferrules, benefiting from both AI servers and high-speed optical modules. The company was listed on the Hong Kong Stock Exchange in July.
Three-circle is not alone in this trend. Along the Guangdong coast, from Chaozhou to Zhaojin and Yunfu, a cluster worth one trillion yuan has formed, led by the so-called 'three musketeers': Three-circle, Fenghua from Zhaojin, and WiRong from Yunfu. Fenghua, being one of the first market participants to implement full production lines from the United States, recorded a 74% growth in net profit for the first half of the year. Meanwhile, WiRong, founded by former Konka president, specializes in high-end and ultra-miniature MLCCs and ranks third among Chinese manufacturers by MLCC revenue in 2024, with its ultra-miniature components holding the first spot in China and the second globally.
Goldman Sachs noted that MLCCs constitute the third largest expenditure item in an AI server specification after Graphics Processing Units (GPUs) and data storage systems. The market is expected to grow approximately 4.3 times between 2025 and 2030. Shares of companies manufacturing MLCCs in Guangdong have risen significantly this year, reflecting the computing supercycle penetrating down to the component level.