Analysis of Sanhuan Group's Competitive Advantages in the MLCC Market

Sanhuan Group (stock code: 300408.SZ), a leading enterprise in China’s electronic ceramics sector, presents a competitive pattern of “global leadership in segmented fields, catch-up and breakthrough in the MLCC field” in the MLCC (Multilayer Ceramic Capacitor) market. The following is an in-depth analysis from multiple dimensions:

Sanhuan Group ranks 9th in the global MLCC market with a market share of approximately 2%[1]. Although this figure seems low, it needs to be understood in the following context:

• No.1 in Mainland China
  : Sanhuan Group is the largest MLCC supplier in mainland China and has a first-mover advantage in the wave of domestic substitution[1]
• Huge Growth Potential
  : Compared with giants like Murata (32.7%) and Samsung Electro-Mechanics (20.5%), the company still has huge room for improvement[1]
• Technical Gap Exists
  : The company has achieved mass production of 1-micron dielectric layers, but Murata has achieved 0.8 microns, with a 0.2-micron technical gap[1]

Sanhuan Group adopts a unique vertically integrated technology route, which is its most significant competitive advantage:

• Full Industrial Chain Control
  : From raw materials (ceramic powder) to production equipment and manufacturing processes, it achieves independent control of the entire industrial chain[1]
• Cost Advantage
  : The cost of high-capacity MLCC products is 15%-20% lower than that of Japanese enterprises, and their performance reaches international first-line levels[1]
• Rapid Response Capability
  : Can quickly adjust production plans and product specifications according to market demand

Sanhuan Group’s technical accumulation in the field of electronic ceramic materials provides strong support for its MLCC business:

• Upstream Formulation Technology Advantage
  : Both electronic ceramics and MLCCs are centered on formulation technology; the company’s deep accumulation in the electronic ceramics field forms a R&D synergy effect[2]
• Process Technology Reuse
  : The precision manufacturing process of optical communication ceramic components can be partially transferred to MLCC production

The company’s global leading position in other electronic ceramic segmented markets provides it with stable cash flow and technical accumulation:

Sanhuan Group has established high-quality customer resources covering multiple fields:

• Communication Field
  : Global communication giants such as Huawei, ZTE, Nokia, Ericsson[1]
• Consumer Electronics
  : Mainstream brands such as Apple, Samsung, Xiaomi, OPPO, VIVO[1]
• Automotive Electronics
  : New energy vehicle enterprises such as BYD, Tesla[1]

Against the backdrop of trade frictions and supply chain security, the demand for domestic substitution is urgent:

• The localization rate of the domestic MLCC market is still at a low level
• The problems of late start, small production capacity, and incomplete specifications of mainland MLCC enterprises are being rapidly improved
• The demand for MLCC in emerging fields such as 5G and new energy vehicles continues to grow

• Successfully achieved mass production of 1-micron dielectric layers in 2023[1]
• Continuous breakthroughs in the field of high-capacity MLCCs
• The mass production progress of 400G high-speed packages is 6 months ahead of Japan’s Kyocera

As a technology-driven enterprise, Sanhuan Group continues to increase R&D investment and constantly narrows the technical gap with internationally leading enterprises.

According to the latest market data[0]:

Financial data shows that the company has strong profitability and a healthy financial structure.

1. Vertical Integration
   : Cost and quality control advantages brought by the full industrial chain layout
2. Technological Synergy
   : Empowerment of MLCC business by electronic ceramics technology accumulation
3. Customer Resources
   : Customer network covering global mainstream consumer electronics and communication brands
4. Domestic Substitution
   : First-mover advantage against the backdrop of supply chain security

1. Technical Gap
   : There is still a gap in dielectric layer technology compared with leading enterprises like Murata
2. Market Share
   : The global market share is only 2%, with huge room for improvement but fierce competition
3. Capacity Expansion
   : Continuous investment is needed to expand production capacity and improve product line coverage

Sanhuan Group’s competitive advantages in the MLCC field are mainly reflected in cost control and the vertical integration model. Although there is still a gap in global market share and technical level compared with international giants, it has significant growth potential under its position in the Chinese market and domestic substitution opportunities. It is recommended to pay attention to the company’s technological breakthrough progress and capacity expansion plans in the high-capacity MLCC field.

[1] In-depth Research Report on Market Competitiveness of Chaozhou Sanhuan Group - Caifuhao (https://caifuhao.eastmoney.com/news/20251225002127153411590)

[2] Sanhuan Group (300408.SZ): Leader in Electronic Ceramics, Domestic MLCC Leader - Dongfang Caifu Securities Research Report (https://pdf.dfcfw.com/pdf/H3_AP202312251614897439_1.pdf)

[0] Jinling API Real-time Market Data