Major Multi-Layer Ceramic Capacitor (MLCC) firms are set to raise their prices by 40-50% with the new prices to be effective from April 1, 2018. The price rally will likely become a source of increasing pressure for second-tier device manufacturers.
Several downstream device manufacturers, countering the impact of MLCC spot price volatility, are reportedly engaged in the development of alternative products employing fewer MLCCs.
Some companies have developed samples using 6 MLCCs instead of 12 without undermining the device performance; and are also considering sourcing MLCCs from China-based suppliers, which are able to offer cheaper quotes.
With MLCC providers giving priority to their EMS and ODM clients, their limited MLCC availability for second-tier device makers have prompted smaller-scale clients to buy MLCCs from channel distributors. Some distributors intend to take advantage of the rise in prices resulting in the component spot price volatility.
- Lead time data published by one global distributor shows in the image below that almost 50% of the component products it sells (capacitors, resistors, inductors) saw lead times increase.
- According to TTI, 22% of capacitors are highly constrained, meaning lead times of greater than 26 weeks, predominantly on multi-layer ceramic capacitors and some polymer capacitors. Resistor lead times are out as much as 52+ weeks for many suppliers.
Hand-held Technology is Drying Up MLCC Stock
The market supply of multi-layer ceramic capacitors, particularly those for mass-market notebooks and smartphones, has been tight. The supply of MLCCs for fast wireless charging solutions also remains tight.
Although smartphone sales volume has been leveling off, the number of multilayer ceramic capacitors (MLCCs) used in each handset has been growing. Apple's iPhone 7, which was released in 2016, has some 900 of the capacitors and 2017 models contain more than 1,000 MLCCs.
Major EMS and ODM manufacturers have reserved the majority of the available general-type MLCC supplies from their Taiwan-based providers. Nevertheless, these downstream vendors continue to source advanced, small-size and high-performance MLCCs mainly from Japan-based Murata and TDK.
The Ultra-Small Case Size Content
The chart below illustrates the adjustments to MLCC quantities by end-product market. Two key soft spots are in the increased capacitance requirements in handset and automobiles, which takes a significant jump upward as well move from the Apple 6s to the Apple X; and as we move from internal combustion engines to Electric Vehicles.
Image Source: KEMET Financial Presentation Feb 2018- ICE- Internal Combustion Engine- This trend is constantly upward and in motion. The content shifts upward inside handsets and cars will consume all the world’s stacking capacity. Real electronic component shortages will materialize as soon as the handset business begins to gobble up parts to satisfy internal shifts in black box requirements for capacitance.