The blooming Multi-Layer Ceramic Capacitor (MLCC) market has been going downhill due to the stagnant domestic economy in China and the decline in global smartphone sales.
According to the industry on 7th, inventory growth in warehouses in the MLCC industry has increased due to slowdown in demand. This is why sales of low-cost MLCC makers such as Taiwan's Yageo have recently fallen. The Taiwan MLCC industry reported that the rate of operation fell sharply in the fourth quarter of last year. Samsung Electro-Mechanics also posted slightly lower than market expectations in the fourth quarter of 2018 due to a decline in MLCC shipments.
Morgan Stanley anticipated in a recent report that MLCC prices would fall 20 to 30 percent in the first quarter of this year over the same period in the previous year. Some analysis showed that the subminiature 0402 (0.4 × 0.2mm) MLCC might be lowered by 40-50%. Morgan Stanley analyzed that major MLCC makers would push their inventories to the market, causing price drops.
Until last year, the MLCC market was booming because supply did not increase significantly. According to the US electronics component maker, TTI report, demand for MLCCs has increased by 25-35% each year over the past several years. On the other hand, production has only increased by 10-25% which caused increase in the price. However, supply-demand balance has been adjusted due to the recent decline in demand for complete electronic products, and supply has surpassed demand.
Japan’s Murata Manufacturing and Samsung Electro-Mechanics plan to break through the demand downturn by focusing on high-value-added electronic and industrial MLCCs. Samsung Electro-Mechanics also announced that it would raise about one third of its total MLCC sales this year from electronic and industrial products. Price of MLCCs for electronic products are 2 to 4 times more expensive than IT products. The number of MLCCs in a car is between 3000 and 5000 units, which is more than smart phones (800-1000 units).
An industry observer said, “MLCCs for electronic products require highly reliable technology functional in areas with high-temperature and high-voltage” and “only few companies that have passed strict technical verification of their clients can take an action.”
However, there is still a sense of unease in terms of ‘absolute shipments.’ The number of smartphones sold annually is over 1.4 billion units. Each year, the number of new cars sold in the world market is around 80 million units. An industry observer explained, “Murata and Samsung Electro-Mechanics are expanding competitively, so there is a possibility that supply of high-value-added MLCCs will also exceed their demand supply when actual factories are in operation.”
The MLCC is a component that stores the current to be used in each component inside the electronics and allows it to flow only as needed. It keeps the electric flow stable and blocks electromagnetic waves.