The Severe Shortage of Multilayer Ceramic Chip Capacitors (MLCC)

The Severe Shortage of Multilayer Ceramic Chip Capacitors (MLCC)

Due to the scientific principal governing electrical circuits, it is necessary for electronic equipment to have quite a lot of capacitors.  From home appliances, automotive, smartphones and industrial robotics, it is impossible to find an electrical product without a capacitor. Capacitors are widely used to store energy, suppression and coupling, decoupling, suppress filter noise, sense changes in capacitance and start motors.

Among several types of capacitors, ceramic capacitors, especially multilayer ceramic chip capacitors (MLCC), are the most produced and used in electronic equipment. The annual production is estimated to be one trillion pieces. MLCC has been the “workhorse of the Electronic Component Industry” for more than 25 years. By stacking advanced dielectric materials and nickel electron powders, MLCCscome with an extremely high capacitance that can fit well into the higher priced electrolytic range. Additionally, the stability of ceramics, lower cost, and robust performance provide design engineers with attractive solutions.

The recent shortage of MLCC started in the 2nd half of 2016 and there is no sign of relief. Lead times are stretched, and the price for all MLCC product lines; such as GRM155R71C104KA88D, GRM21BR61E475KA12L, and 06035C103KAT2A, is increasing in the market. To make matters worse, industry experts are expecting the shortage to last beyond 2020.

The significant jump in demand for MLCC from the handsets and automotive sectors is putting pressure on the supply chain. As shown in the chart below, the number of MLCCs increased from around 500+ pieces to over 1000 pieces from iPhone 6s to iPhone X. Furthermore, electric vehicles require 4 times more MLCCs than the traditional internal combustion engine (I.C.E.) automobile.

Hideki Maruyama, President of Murata (China) Investment Co. Ltd, also confirmed that alternative fuel automobile and ADAS auto pilot supporting system is developing at a speed that is much faster than they anticipated, consuming a huge portion of MLCC supply in the market. Additionally, Chinese smartphone brands such as Huawei, Xiaomi, Oppo, and Vivo are requiring more MLCCs in their products as they are entering into to the high-end market and expanding global presence beyond China.

Data Source: KEMET Financial Presentation Feb 2018- page 18

On the supply side, after years of development, the manufacturing of MLCC has somewhat become a monopoly where a small number of large factories control the market. Instead of expanding market share with broad product lines, these manufacturers are seeking higher margins and sustainable development. They are switching their focus from low and medium priced products to auto-rated and industry-rated products with high margins.

For example, Kyocera discontinued 104 and 105 specifications for the 0402 and 0603 sizes at the end of February. This specification is widely used in almost all products and is the most needed MLCC in the market. Kyocera’s exit just made the shortage worse while another manufacturer Murata also issued a notification on March 2nd, stating that it will increase price on 0603 and 0805 sizes high dielectric capacitor with capacitance under 1uF.

In such a severe shortage market, the traditional franchise distributor channel will be unable to adequately support strained supply chain needs. Instead, a well-qualified partner with access to the open market, such as Advanced MP Technology, can help to mitigate the MLCC shortage challenges with their access to wide supplier network around the world, flexibility in logistic and state-of-the-art quality system. Contact Advanced MP Technology staff today to see how we can support your need for MLCC.