Strong AI demand is tightening the multilayer ceramic capacitor, or MLCC, market, with major manufacturers running close to full capacity, lead times stretching to 12 to 16 months and some buyers reportedly offering two to three times the price to secure supply. Industry sources said competition has intensified around producers including Yageo and Murata, creating a highest-bidder dynamic as customers try to lock in parts for AI-related applications. Yageo said AI-linked customers are increasingly seeking to reserve capacity in advance to reduce supply risk. The company expects utilization for standard products to rise from about 80% in the second quarter to more than 90% this quarter, while special products are set to stay above 90%, leaving overall operations trending toward full load. It is also adding production capacity in Kaohsiung, Suzhou, Vietnam and Mexico to respond to demand. The supply squeeze is also shaping buying behavior. Larger customers generally get priority in capacity allocation, while small and medium-sized buyers are left competing for limited availability, often through higher bids, industry insiders said. Yageo added that a growing number of customers want long-term contracts spanning the next six months to several years to secure passive components and limit supply-chain disruptions. Japanese peers are signaling similar strength. Murata and Taiyo Yuden have both raised their outlooks, saying AI server and data center demand has exceeded expectations and is driving higher use of high-capacitance products, underscoring how AI infrastructure spending is spilling into the broader electronic components market.