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2023/05/18
TrendForce reports that global economic headwinds have had a significant impact on the MLCC industry, with shipments from January to April of this year totaling 1359 trillion units This represents a 34% decrease compared to the same period in 2021, highlighting the greater impact of global economic headwinds on the MLCC industry compared to the pandemic An unstable demand for orders from brands and ODMs since 2Q23, coupled with continuous price pressure, has forced MLCC suppliers to control capacity in order to maintain a balance among supply, inventory, and pricing In May, the average capacity utilization rate of Japanese suppliers was 78%, while Chinese, Taiwanese, and South Korean suppliers stood around 60–63% Reduced production may become a short-term norm as consumer demand continues to remain weak
New smartphone releases from Huawei, Honor, and OPPO in the second quarter have failed to effectively boost China’s domestic market consumption, leading brands to adopt a more conservative approach to promoting new products In the server segment, current estimates project a 285% YoY decline in total shipments for the year, with potential further downward adjustments This will affect material depletion for ODMs, including Inventec, Quanta, and Wistron Average inventory levels remained high at 4–8 weeks as of the end of April
ODMs began mass production and shipments of Intel’s 13th generation Raptor Lake CPU platform for both consumer and business models in March—coinciding with the three-year replacement cycle since the pandemic However, Quanta and Compal, the top two ODMs, reported shipments of only 33 million and 24 million units in April, respectively Comparatively, during the same period last year when China was under lockdown and supply chains were disrupted, shipment volumes still managed to reach 32 million and 22 million units, respectively This underlines the current sluggish demand in the end-user market, and combined with economic uncertainties, has led OEMs to adopt a more conservative outlook for new product launches
TrendForce further states that previously, the market generally believed inventory pressure was the main factor impacting the MLCC industry However, for smartphones, PCs, and laptops, which account for 30% of MLCC demand, ODMs began adjusting their inventory levels as early as the third quarter of last year By 2Q23, they had gradually returned to normal, with occasional urgent and short orders replenishing stock Nevertheless, overall demand is still weak due to the sluggish consumer market, resulting in low and unsustainable demand for MLCCs from buyers In May, the MLCC supplier BB ratio was 085, only a slight increase of 001 compared to April, indicating extremely low order growth
Looking ahead to the third quarter, although brands and ODMs still hope the traditional peak season can stimulate demand recovery, the forecasted growth rate for MLCC order volume remains low, hardly reflecting the usual uptick expected during the peak season One notable exception is the Japanese firm, Murata, which recently bagged an order for components for Apple’s iPhone 15, set to debut in 3Q23 The order volume has already nudged past last year’s figures, indicating that Apple is confident the upgraded hardware and software of the iPhone 15 will continue to turn heads in the consumer market
For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms Latte Chung from the Sales Department at lattechung@trendforcecom
For additional insights from TrendForce analysts on the latest tech industry news, trends, and forecasts, please visit our blog at https://insidertrendforcecom/
2023/02/14
According to TrendForce’s recent analysis of the MLCC market, suppliers’ average book-to-bill (BB) ratio has risen slightly to 079 this February The flow of orders has slowed down as seasonality affects the demand related to consumer electronics, data centers, and 5G network infrastructure However, orders for automotive MLCCs may be able to grow in volume due to Tesla initiating a round of price cuts on its vehicles In view of Tesla’s aggressive pricing, other carmakers have slashed prices as well in order to retain their market shares As a result, the flow of orders for automotive MLCCs has shown a steady momentum during the first quarter of this year Hence, MLCC suppliers are expected to focus on automotive offerings with respect to capacity expansion and R&D throughout the entire 2023
TrendForce points out that after experiencing the impact of the collapse of the demand for consumer electronics in 3Q22, MLCC suppliers have been witnessing a relatively stable flow of orders for automotive MLCCs Therefore, they will be concentrating their resources on the development of automotive offerings this year Additionally, they will be ramping up efforts to improve manufacturing process technologies and building up production capacity Japan’s Murata as the leading supplier maintains the target of increasing its monthly production capacity for automotive offerings by 10% every year Murata’s production capacity for automotive MLCCs is currently projected to reach 25 billion pieces per month by 2Q23 This growth will reinforce the company’s position as the market leader The other major Japanese supplier TDK already announced in May 2022 that it plans to expand its existing plant in Kitakami, Iwate At this plant, TDK will add 5~8 billion pieces per month for automotive offerings, and the newly added capacity is expected to enter operation in September 2024 As for other suppliers such as South Korea’s Samsung, Japan’s Taiyo Yuden, and Taiwan’s Yageo, they will also be substantially raising production capacity for automotive offerings during 2023 Their increases are expected to average around 2~3 billion pieces per month
Turning to Taiwan’s WALSIN, it was relatively late in building up production capacity for automotive MLCCs and has now attained just around 15~2 billion pieces per month for these products Still, its production capacity for automotive MLCCs is projected to reach 25~3 billion pieces per month by the end of this year with the new production lines that it is setting up at its plant in Kaohsiung As for MLCC suppliers based in Mainland China such as Fenghua Advanced and VIIYONG, they have been recruiting industry talents from all over the world in recent years so as to improve their R&D and manufacturing processes Since 2H22, these suppliers have been launching low-capacitance automotive MLCCs and expanding production capacity for these products However, they are still facing some technological bottlenecks Currently, their production capacity figures for automotive MLCCs average around 300~400 million pieces per month
As Carmakers Slash Vehicle Prices to Gain Market Share, Low-Capacitance Automotive MLCCs Have Been First to Face Price Competition
As this year moves forward, the global economy is expected to remain in a rather vulnerable state despite the recent easing of inflation in the US and Europe Carmakers have been lowering their vehicle prices in order to stimulate demand, but this also ratchets up the price competition in the car market From carmakers’ perspective, gaining cost advantages will be crucial TrendForce believes the intensifying competition in the car market is going to exert a greater downward pressure on prices across the automotive supply chain The high gross margins that MLCC suppliers have longed maintained for their automotive offerings could start to gradually shrink Furthermore, Japanese suppliers have held large market shares for a long time, but this is also about to change as later entrants start to eat into their market shares TrendForce projects that Murata’s, TDK’s, and Taiyo Yuden’s shares of the global production capacity for automotive MLCCs will shrink in 2023 to 41%, 16%, and 13% respectively
TrendForce also notes that the demand in the Chinese market for electric vehicles (EVs) has been bolstered by favorable government policies Moreover, Chinese EV developers such as Xiaomi, Huawei, and BYD started to adopt low-capacitance automotive MLCCs from Fenghua Advanced and VIIYONG in 2022 The competition among MLCC suppliers for orders related to low-capacitance automotive products began around that time as well This year, Japanese suppliers are expected to gradually withdraw from the market segment for low-capacitance automotive products due to the fierce price competition Instead, suppliers from Mainland China, Taiwan, and South Korea will be fighting for orders in this segment Going forward, newly formed EV startups will be searching for ways to reduce the costs of their vehicles further Therefore, MLCC suppliers will be attempting to undercut each other in order to capture more orders for automotive offerings during 2023
For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms Latte Chung from the Sales Department at lattechung@trendforcecom
For additional insights from TrendForce analysts on the latest tech industry news, trends, and forecasts, please visit our blog at https://insidertrendforcecom/
2022/11/07
The latest research from global market intelligence firm TrendForce finds that the usual demand surge related to the year-end holiday season is not materializing during this second half of the year due to several factors First, the data about the global economy continue to show a negative outlook, and the consumer electronics market is unable to shake off the constraining influence of high inflation and rising interest rates Furthermore, at the 20th National Congress of the Chinese Communist Party that was held this October, the leadership of the Chinese government made it clear that the strict zero-COVID policy will remain in force Lastly, ODMs are having problems lowering their inventories, and the whole supply chain from the upstream to the downstream is still experiencing inventory-related issues as well Hence, in view of the underwhelming peak season and ODMs’ cautious approach to stocking up, TrendForce estimates that the average BB (book-to-bill) ratio of MLCC suppliers will have slipped slightly to 081 in 4Q22
Starting this November, MLCC suppliers including Murata, SEMCO (Samsung), and Yageo have been receiving rush orders involving small quantities These orders are from China’s Tier-2 smartphone brands and suppliers for networking devices, motherboards, and graphics cards Among the various applications segments of the MLCC market, graphics cards was the first to experience falling demand in 1Q22 Therefore, through early and continuing adjustments, inventories of graphics cards OEMs have recently returned to relatively healthy level It is also worth mentioning that traders in the Chinese spot market were aggressively cutting prices so as to capture more orders during 3Q22 However, they have halted quote offering and held back their supply lately, thereby forcing some Tier-2 smartphone brands to place rush orders with MLCC suppliers This development indicates that the end is near for the inventory correction period in the Chinese spot market
Although Decline in Prices of Consumer-Spec MLCCs Has Eased, Downward Price Pressure Will Mostly Remain During 1Q23
There is a chance that the price competition among MLCC traders will moderate after 4Q22 Nevertheless, TrendForce’s latest market survey shows that MLCC suppliers’ average inventory level is staying around 90 days As for distributors in the channel market, their average inventory level presently comes to 90~100 days as well Turning to the major ODMs, their average inventory level still resides around 30 days (3~4 weeks) Taking all market participants (ie, distributors, suppliers, and ODMs) into consideration, the inventory situation of the entire MLCC market remains far from optimal (ie, at the average level of 120 days)
Previously, ODMs kept almost no inventory for MLCCs However, with the recent resurgence of COVID-19 outbreaks in China, ODMs are compelled to have some stock on hand so as to avoid a potential supply disruption Furthermore, economic activities are expected to be very subdued in 1Q23 This will impact demand and exacerbate the off-season slump With no tangible growth in orders and too much stock on hand, inventory-related costs will become much harder to bear Consequently, ODMs will inevitably be very proactive in seeking price concessions for MLCCs
On the other hand, TrendForce’s latest investigation finds that MLCC suppliers have realized that even after two consecutive quarters of substantial price reductions, there has been no turnaround in ODMs’ demand Currently, quotes for most midrange and low-end consumer-spec MLCCs show no tangible profit margin At the same time, suppliers are under pressure to present satisfactory year-end financial results Therefore, suppliers are less willing to cut prices than before Right now, their top priority is to survive through the latest market downturn Keeping prices stable will allow them to retain some profitability and thereby persevere through this challenging period for the industry
To Mitigate Effect of Demand Slump for Consumer Electronics, MLCC Suppliers Expand Production Capacity for Automotive Offerings
Looking ahead to 2023, the state of global economy is still expected to be anemic This, together with geopolitical tensions and China’s commitment to its zero-COVID policy, will likely delay the demand turnaround in the consumer electronics market However, the demand for electronic components from the automotive industry is expected to pick up steadily as the global semiconductor chip shortage gradually dissipates Hence, MLCC suppliers will be focusing on automotive offerings next year SEMCO will be aligned with Samsung Group’s grand strategy for 2023: all divisions including semiconductors, display panels, passive components, camera modules, etc will launch a full-scale effort to develop businesses in the global automotive market Regarding SEMCO’s capacity expansion plan for 2023, the supplier will add a total of 2 billion pieces per month of production capacity for automotive-spec MLCCs at South Korea’s Pusan and China’s Tianjin
Turning to Murata, the supplier has kept its production capacity for automotive MLCCs growing at an annual rate of 10% Starting in 2Q23, Murata will be adding a total of 3 billion pieces per month of production capacity at its three production plants Two of them are located in Japan’s Fukui Prefecture and Izumo, whereas the third one is located in the Philippines With this addition, Murata will reach 25 billion pieces per month for its entire production capacity, thus further cementing its position as the industry leader
Lastly, regarding Yageo, it has fully incorporated KEMET’s technologies for automotive MLCCs and will begin expanding its production plant in Taiwan’s Kaohsiung in 2Q23 This plant is expected to gain another 15 billion pieces per month of production capacity
For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms Latte Chung from the Sales Department at lattechung@trendforcecom
For additional insights from TrendForce analysts on the latest tech industry news, trends, and forecasts, please visit our blog at https://insidertrendforcecom/
2022/06/14
With the course of the COVID-19 pandemic constantly changing, China is sticking with its “Dynamic Zero-COVID Policy” and has been slow to lift the lockdown on its cities that have been recently affected by the outbreaks of the disease Hence, the manufacturing industries of the major Chinese cities are facing delays in the resumption of normal operation, and a production gap has emerged in 2Q22 For the electronics ODMs, this production gap will be difficult to bridge in 2H22 Additionally, the ongoing global inflation is keeping prices of goods at a very high level, and this trend will dampen the peak-season demand surge during the second half of the year The effect of the inflationary pressure has been especially noticeable in the demand for consumer electronics such as smartphones, notebook computers, and tablet computers This, in turn, is also impacting the MLCC market in terms of demand and inventory Currently, the general inventory level has risen above 90 days for MLCCs of all sizes Therefore, TrendForce forecasts that prices of consumer-spec MLCCs will fall further by 3-6% on average in 2H22
On the other hand, demand remains fairly strong in application segments such as high-performance computing solutions (which include servers), networking equipment, industrial automation solutions, and energy storage systems Furthermore, IDMs in the semiconductor industry will be adjusting the allocation of production capacity as the market for consumer electronics continues to experience a slowdown in 2H22 As a result, the undersupply situation for certain ICs will ease Moreover, demand will be propped up in the high-end segment of the MLCC market and other application segments (eg, automotive electronics and industrial equipment) All in all, thanks to the demand related to automotive electronics, servers, networking equipment, etc, TrendForce forecasts that the annual total MLCC shipments will increase by 2% YoY to around 258 trillion pieces for 2022
Shipments and Prices Have Fallen for Consumer-Spec MLCCs, While Quotes for Automotive- and Industrial-Spec MLCCs Have Held Steady
According to TrendForce’s research, prices of consumer-spec MLCCs registered drops of 5-10% on average during the period from 1Q21 to 1Q22 To further spur demand, MLCC suppliers have lowered prices further by 3-5% in 2Q22 In fact, the price has dropped to the level of material cost for some low-end consumer-spec MLCCs In the previous market cycles for MLCCs, the inflection point in the supply-demand dynamics tended to appear following continuous climb or fall in both prices and shipments For instance, prices and shipments were on an upward trajectory from 2H20 to 2021 And as of now, prices and shipments have been on a downward slide for two consecutive quarters Looking ahead, there will be no easing of the downward pressure, so quotes for consumer-spec MLCCs are projected to register declines of 3-6% during 2H22
With regard to industrial-spec MLCCs for niche applications, the overall demand for these products will pick up as buyers experience a loosening of supply for some semiconductor chips TrendForce currently projects that prices of industrial-spec MLCCs will either register more moderate declines of 1-2% during 2H22 or stay mostly flat for the period Turning to automotive-spec MLCCs, prices and shipments will hold steady because quote offerings and contract negotiations are conducted on an annual basis for this product category
MLCC Suppliers in Japan, South Korea, and Taiwan Expand Offerings so as to Limit Impacts Related to Demand Fluctuations in Consumer Electronics Market
Japanese MLCC suppliers Murata and TDK now control almost 80% market share for automotive MLCCs Besides raising production capacity for automotive offerings, these two suppliers are also strengthening service offerings for various related applications For instance, they are boosting engagement with their customers through collaborations on product design and advancing the development of service offerings to the modular level In the fields of automotive powertrain systems and ADAS, Murata and TDK have begun to provide solutions and services for image sensor modules, intelligent parking assist (IPA) modules, etc
South Korea’s Samsung has successfully completed the qualification process for its automotive offerings this year Moving into 3Q22, Samsung will gradually raise production capacity for automotive offerings at its plant in Tianjin As for Taiwan’s YAGEO, the new production lines at its base in Kaohsiung are expected to commence pilot production in 4Q22 Much of the additional production capacity that YAGEO will be taking on is for high-voltage MLCCs and large-sized 22u automotive MLCCs (eg, the 0805 and 1210 products) The new production lines will enter the mass production stage near the end of 1Q23 with the initial total production capacity reaching 8-10 billion pieces per month YAGEO is also diversifying its services and solutions in order to expand into high-end application segments such as military technologies, networking equipment, automotive electronics, medical devices, etc Examples besides MLCCs include resistors, inductors, and antenna modules
TrendForce’s latest investigation on the COVID-19 lockdowns in China finds that the manufacturing industries residing in the eastern part of the country are starting to recover Looking specifically at Shanghai, the transportation of goods out of its seaports and airports is gradually returning to normal Therefore, ODMs’ production sites that are located within the region will be able to again ramp up shipments of finished products Furthermore, the issue of component mismatch will ease significantly as the logistics system, on the whole, is returning to normal operation The improvement in logistics will thus inject growth momentum into shipments of finished products in 3Q22 On another hand, several major variables will be influencing the MLCC market during 2H22 These include geopolitical tensions, the maintenance of the zero-COVID policy by the Chinese government, and the potential of inflation turning to stagflation
For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms Latte Chung from the Sales Department at lattechung@trendforcecom
For additional insights from TrendForce analysts on the latest tech industry news, trends, and forecasts, please visit our blog at https://insidertrendforcecom/
2022/04/12
Due to the explosion of the COVID-19 pandemic in China, Shanghai has adopted a rolling lockdown policy since March and Kunshan City, a major production hub for the electronics industry near Shanghai, has also felt the impact According to TrendForce, limited manpower and logistics and suspended transportation options mean neighboring OEMs and ODMs can only rely on onsite inventory to barely meet the needs of production lines, further exacerbating component mismatches Concurrently, a short-term surge in finished product shipments and demand for material replenishment after the various lockdowns are lifted may gridlock customs authorities, with delivery delays potentially lasting until the end of April before there is any chance for improvement
TrendForce further indicates, starting from 4Q21, demand for consumer specification products, which account for the bulk of products sold by MLCC suppliers in Taiwan, Korea and China, weakened as customers continue to adjust their inventories Although ODMs currently predict the demand for consumer specification MLCC will recover month by month in 2Q22, emergency lockdowns caused by the pandemic are bound to impose delays on logistics Likewise, OEMs’ supply of key direct buy components will also be interrupted due to the Shanghai lockdown Shortages of CPU, battery module, and panel materials will impact production lines because materials cannot be delivered to relevant factory warehouses, exacerbating ODM component mismatch issues On the other hand, the focus of downstream branded customers remains on low visibility and weak demand in the 2Q22 end market
MCLL supplier production centers in China including those located in Tianjin, Suzhou, Wuxi, and Guangdong, have yet to be locked down but inter-provincial logistics and transportation have clearly felt the escalation of inspection and supervision since the end of March, resulting in prolonged transportation timetables However, the biggest problem for MLCC suppliers at this stage is they cannot deliver materials to Shanghai and Kunshan There are a number of large ODM plants at these two locations, such as Quanta Shanghai Manufacture City in the Songjiang District of Shanghai and the Compal, Wistron, and Pegatron campuses in Kunshan At present, ODMs’ average inventory level for consumer specification products sits at 3 to 4 weeks, which is sufficient to meet the needs of short-term production However, stocks of certain high-voltage automotive MLCC of 250V or higher specifications and high-end server MLCC size 0805/1206/1210 items may be in danger of depletion
Looking to 2Q22, the lockdowns of Shenzhen, Dongguan, and Shanghai that began in March have hobbled China's manufacturing industry and sent it into a period of contraction In addition, the Russian-Ukrainian war and rising inflation continue to slow demand growth for mainstream consumer electronics, potentially risking recession With so many unfavorable factors, ODMs must still observe an easing of component mismatching before further considering MLCC stocking momentum after restrictions are lifted If the pandemic in China cannot be effectively brought under control in the short term, overall ODM inventories will continue to be maintained at a high level for approximately 1 to 15 months to prevent similar sudden lockdowns disrupting operations However, TrendForce believes that it will be difficult for MLCC suppliers to surmise the visibility of customers' real demand Once the purchase order situation reverses, they will be unable to respond quickly with capacity adjustments, thus becoming a primary focus of MLCC manufacturers’ risk management in 2Q22
For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms Latte Chung from the Sales Department at lattechung@trendforcecom
For additional insights from TrendForce analysts on the latest tech industry news, trends, and forecasts, please visit our blog at https://insidertrendforcecom/
