Since the second half of 2016, OEMs have been coping with the limited supply of capacitors, specifically Multilayer Ceramic Capacitors (MLCC). Some experts believe the shortage will extend to 2019, while many others expect until year 2020.
Considering product advancement in smartphone, automobile and IoT sectors is rapidly growing, many experts believe there is no relief in sight for the current MLCC shortage. Although MLCC production is increasing, demand continues to outweigh supply. According to SourceToday, MLCC manufacturers including Murata, Vishay, Kemet, TDK and AVX have been adding capacity trying to keep up with demand. The global MLCC market is expected to hit US $9,720 million by 2022.
Despite the increase in supply, MLCC components, such as Murata’s GCQ1555C1HR50WB01D and Vishay’s K105K20X0UF63H5H, will continue to be in high demand as they are necessary to operate many electronic devices. The smartphone, automobile and IoT sectors are constantly transforming their end-products to become faster, smarter and more efficient. Each year, consumers expect more advanced smartphones to be on the market. Jabil reports that there are approximately 1.5 billion smartphones manufactured each year with each model roughly containing about 1,000 capacitors. Smartphones’ high demand amongst consumers creates one of the primary reasons for this shortage. In addition to smartphones, the automotive market also contributes to the MLCC shortage. Future electric vehicles are anticipated to require up to 22,000 MLCCs in a single car while a standard combustion engine car currently uses 2,000 to 3,000 capacitors. Ceramic capacitors cannot be interchangeable when it comes to electric vehicles, thus contributing a large amount to the shortage. The evolvement of IoT also contributes to this shortage as Jabil reports that there will be more than 20 billion IoT devices created by 2020, all of which will require some amount of capacitors on the board.
While the demand for MLCCs continues to rise, a recent MLCC shortage survey conducted by ESMChina shows that many ODMs, EMSs and OEMs do not believe that the shortage will end soon. 63.24% of the total participants, which includes 402 participants whom over 70% are ODM/EMS/OEM, have not seen a price drop in MLCCs. About half of the participants revealed that they have been looking for cross parts of MLCCs as an alternative approach for relief during the shortage. 25% believe that the shortage will end in 2019 with 22.79% trailing behind believing that it’ll end in 2020, if not 2021.
In most shortages, OEMs have traditionally considered secondary, tier two to tier three vendor levels as compared to their first choice. According to Evertiq, everyone has already utilized this method as an applicable strategy resulting in full capacity for many manufacturers.
The current condition for lead times, which is at six to 12 months, is expected to increase. During the last five years, between 2013 and 2018, statistics have shown that MLCC lead times have been steadily increasing with the longest lead times occurring within the last year.
Additionally, pricing for MLCCs has been increasing as well. Since June 2017, major MLCC manufactures, such as Murata, Samsung and Yageo, have increased prices several times for all MLCC parts. Murtata recently implemented a cost increase of 20% to 30% on MLCCs. The average price for the most popular 0201, 0402 and 0603 MLCCs is now much higher than before. Although MLCCs only account for a small portion of the total BOM, the increasing cost of MLCCs and other passive components is putting pressure on OEMs and EMSs bottom-line.