Passive component stocks jumped in Taiwan after a UBS report showed shrinking supply and rising prices for the tiny ceramic capacitors used in almost every electronic device — good news for makers, a cost warning for buyers.

• Global distributor stocks of MLCC capacitors fell again in early August to a record low, but the value of that inventory rose because prices are climbing.
• Prices are up across the big makers, including Samsung Electro-Mechanics, Taiyo Yuden, TDK, Murata and Taiwan's Yageo.
• Taiwanese suppliers Holy Stone and CHILISIN hit their daily trading limit, with Yageo and other passive component names also rising.
• Yageo's order-to-shipment ratio has jumped sharply, factory use is expected above 90% this quarter, and some customers are asking to lock in long-term supply deals.
• Makers with more high-end products stand to gain first from the price recovery.

Outlook: Tight supply points to further price increases for capacitors and continued strength in passive component shares, though valuations in the group are already stretched.