As you may already know, there is a global shortage of multi-layered ceramic capacitors (MLCCs). In the past year, lead times through franchise distribution channels have increased, with allocation becoming a more common occurrence.
Lead time and shortage issues in the electronic component industry is a common occurrence. Focusing solely on the MLCCs, there have been similar market cycles throughout the 1990s and 2000s. However, in contrast with previous periods of shortage, this current situation is unlikely to even itself out.
Although manufacturers are attempting to address the market imbalance, many analysts do not believe that lead times will return to pre-shortage levels until 2020.
The reason for this is twofold.
Firstly, the production of MLCCs has doubled yet the value of the overall market has remained relatively static. This has squeezed profits away from the capacitor manufacturers.
This price disparity is being addressed. A recent article published by DigiTimes stated that most major manufacturers will raise the price of current inventory levels of 40-50% by 2H 2018. This is being passed on to the end user as franchised distributors have started to inform their customers that their prices will have to increase to accommodate this rise.
Secondly, and at the other end of the MLCC supply chain, many individual market sectors are experiencing rapid growth. As a result, the use of MLCCs is higher now than it ever has been. For example, the number of MLCCs in Apple’s flagship has increased 20% from the iPhone – to the iPhone X and electric-powered vehicles require four times the amount of MLCCs than traditional combustion engine vehicles.
Capacitor manufacturers are struggling to keep pace with the current market and with historically low margins, they are reluctant to do so. In this case, demand is not driving supply. This has led Murata’s Hideki Maruyama to state “the overall MLCC industry is out of stock.”
This situation is unlikely to improve in the short-term. According to market statistics, true demand through franchised distribution channels is increased year-on-year by 30%. Capacitor manufacturers are attempting to meet this, but many people within the industry do not expect this to occur until 2019. As a result, this current shortage is expected to last through to 2020 at the earliest.
With shortages at such a critical level and many capacitor manufacturers and franchise distributors refusing to take new orders at this time, we recommend that you move quickly to advance purchase MLCCs. By acting now, you can guard yourself against any further market disruption and protect your production lines during periods of extending lead times and allocation.
Update: MLCC Prices to rise in 2H 2018
In July, Murata implemented a cost increase across its entire range of MLCCs. The new pricing structure is between 20-30% higher than it was before and is effective immediately.
The decision to raise prices is a direct response to the issues that have plagued the capacitor market for some time and follows previous moves earlier on in the year that saw franchised pricing skyrocket by 40-50%.
Updated: July 2018
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- Posted by Lantek Corporation
- On April 27, 2018