If you use a word to describe the chip industry today, it is bound to be "ice and fire", some time ago the overwhelming reports are difficult to ignore, but look at the entire semiconductor industry, was "ice" and "fire "Interwoven, and not only a chip field, components are also the same.

MLCC has always had "electronic industry rice", as one of the passive components indispensable in the modern electronics industry, after a year of shortages last year, a wave of price increases, seems to usher in a new round of inventory crisis, but even so, the manufacturers of the expansion of the footsteps have not stopped...

Price decline of "ice"

For the semiconductor industry, the terminal holds the final decision. The source of a series of crisis warnings since this year is because of consumer electronics as the representative of the terminal demand ebb, to cell phones, for example, 2022 Q2 global smartphone shipments of 291 million, down 7.7% year-on-year, while mainland China's smartphone shipments of only 67.4 million units, down 10.1% year-on-year.

The original cell phones, laptops, tablets, TVs and other terminal demand is not sluggish, but the data center, Netcom industry demand can still hold up, however, the war is frequent, the consumer more tight, these two types of demand also followed the capsize, passive components factory inventory in the second quarter than the same period last year increased significantly. The sharply tightened consumer market caused the consumer gauge MLCC demand to slip, and the market inventory keeps climbing high.

From the perspective of inventory levels, the passive components industry chain of terminals, channels, the original factory inventory are high, most of the major MLCC manufacturers inventory between 1.5-2.5 months, downstream agents inventory levels than the original factory, the longest up to 4 months, TrendForce research shows that the average inventory level of each size of consumer MLCC more than 90 days.

The high inventory makes the agents' willingness to buy decrease, in order to stimulate the desire to buy, MLCC product prices all the way down. According to TrendForce's survey, from the first quarter of 2021 to the first quarter of 2022, the average price of consumer MLCCs has dropped by 5 to 10% throughout the year.

The key component department research manager Chen Weisheng pointed out that, due to regional sealing control again, MLCC prices have been loosening since the end of last year, and by the impact of weak demand continues to bottom out, the second half of the offer is expected to follow the trend of industrial demand conversion, the biggest change in the bargaining process is the rise of the buyer's market, ODM factory procurement began to actively ask for price.

Needless to say, the cooling of electronic components has put some pressure on the performance and production plans of MLCC manufacturers.

According to the Nikkei News, MLCC maker TAIYO YUDEN received orders last quarter that were 29% lower than the same period last year to 71.6 billion yen, the fourth consecutive quarter showing a decrease in the capacitor sector orders fell by 30% to 47 billion yen, the third consecutive quarter of reduction. It is reported that TAIYO YUDEN is considering to reduce the MLCC capacity utilization rate in July-September 2022 to around 85% from 95% announced in May.

Source: TAIYO YUDEN

Not only Sun Attractions, but also mainland MLCC leader Fenghua Hi-Tech's situation has changed after two consecutive years of high growth in 2020 and 2021. The decline even hit a single quarterly high in the past two years.

In addition, from the overall situation of the industry, the crop rate of major MLCC manufacturers fell to 70%-80%. According to the recent forecasts of the major manufacturers, the third quarter of the standard production capacity of the giant 10 percentage points, the average crop rate dropped to 50-60%; Hoshindo niche products in the first half of this year full load, standard products about 80%, the third quarter will be adjusted to crop rate instead of reducing prices, the standard crop rate dropped to 70-80%.

Tiburon Technology key components department research manager Chen Weisheng analysis, the first half of this year, the overall MLCC market, the impact of China's sealing control market supply and demand pendulum, disrupting the upstream and downstream production operation of the supply chain, coupled with the war in Russia and the deterioration of inflation, affecting the MLCC supplier shipments performance, shipments declined by nearly 16%.

Whether it is the end market sales, or the price of MLCC products, inventory, or manufacturers' performance reports, all reflect the current MLCC market is not optimistic.

The "fire" of counter-trend expansion

Despite the weakness of the consumer MLCC market, the manufacturers have not stopped the expansion of production. In fact, in 2021, in the face of the continued expansion of the market gap, MLCC manufacturers have set off a round of expansion tide, according to the MLCC expansion "gambling": surplus or opportunity," an article statistics, 2021, Japan's Murata, Sunlight and other head enterprises to take the lead in expanding production, China's Taiwan's National Giant Electronics, the mainland's Sanhuan Group, Fenghua Hi-Tech, Core Sound Micro, East Material Technology, Yu Yang Technology, etc. also followed. By 2022, although the market situation has undergone a major shift, but the manufacturers are still firm in their hearts to expand production.

On August 17, Kyocera announced plans to invest 15 billion yen in the construction of a new plant in the Kagoshima branch plant to increase MLCC production capacity by about 20%, with the goal of increasing MLCC revenue to 200 billion yen in 2025, twice as much as in 2021, and the new plant will start construction in February 2023 and put into operation in May 2024. In addition to the new plant in Kagoshima, Japan, Kyocera's plants in Thailand and elsewhere are also increasing MLCC production, with the goal of reaching 200 billion yen in MLCC revenue in fiscal 2025 (through March 2026), twice as much as in fiscal 2021.

In addition to Kyocera, TDK also announced in May this year that it has decided to build a new production building at TDK Electronics Factory Corporation's Kitakami Plant (Kitakami City, Iwate Prefecture, Japan) to enhance MLCC production by focusing on high-reliability automotive products, with construction of the new building expected to begin in March 2023 and be completed by June 2024. TDK has established a system to increase production at its existing MLCC production site and affiliated companies since last year.

After last year's massive production expansion, this August, the MLCC ceramic capacitor expansion project, with an investment of 1.058 billion yuan by TAIYO YUDEN (Guangdong) Co., Ltd. participated in a centralized groundbreaking ceremony in Dongguan, with a construction cycle of 2022-2025.

MLCC future under the contradictory situation

At present, it still takes time for the inventory of consumer gauge MLCC products to recover, but the possibility of further price cuts is unlikely. In terms of inventory, Tiburon Technology expects a serious oversupply of consumer gauge MLCC products in the second half of the year by the fourth quarter, and Taiwan's largest passive component maker, Cathay, has also said that in the case of weak end market demand, it will take six months for the inventory of commodity supply to return to normal levels.

Even if the end market demand has been weak, but MLCC prices should not dip further. Red Tower Securities analysis pointed out the following two main reasons, on the one hand, the main passive components prices have fallen significantly since this year, the main passive components product prices have touched the cost, there is no room for price cuts; on the other hand, the entire market supply and demand pattern has been basically stable, and then it is difficult to reduce prices to grab more share.

However, in contrast to the consumer engine that has been "stalled", the automotive sector has been full of power value, and is expected to become the next strong growth point, which can also be reflected in the above expansion of manufacturers, whether Kyocera, TDK, or Uyang Technology or micro-capacity technology, most of their expansion projects will focus on high-end automotive-grade MLCC products. In addition, Kokugo also expects to increase its share of automotive electronics revenue from the current 18-20% to 22% by the end of 2023.

In recent years, the rise of global environmental awareness has made new energy vehicles the first choice of consumers. The hot end market, coupled with the great demand for chips in new energy vehicles themselves, electric vehicles have become the next growth engine of the semiconductor industry.

From the perspective of market demand, with the miniaturization and precision of automotive electronic equipment, the number of electronic components in the car is increasing, China Electronic Components Association data show that pure electric vehicles MLCC single vehicle usage of about 18,000, the use of the number of far more than the traditional fuel cars. At the same time, the data of Zhiduoxing Consultant shows that the global demand for automotive MLCCs will be about 379 billion in 2020, with a year-on-year growth of 9.1%, and the global demand for automotive MLCCs is expected to reach 473 billion by 2025, with a five-year average growth rate of about 4.6%. There is no doubt that with the upgrading of the automotive industry, the demand for automotive MLCCs will become stronger and stronger.

From the inventory point of view, unlike the high inventory level of consumer gauge MLCC, the inventory of automotive MLCC agents is low, maintaining a regular level of 2-3 months, and there is an obvious shortage of large size high capacity for automotive, with the current delivery time already up to 40 months. Although the small size low capacity inventory is okay, but which the 0603 104 of the car specification is also in short supply.

Of course not only in the field of electric vehicles, 5G mobile communications, IoT infrastructure, etc. will also become the main force pulling the MLCC demand.

Write in the end

MLCC as part of the semiconductor field, its market is also cyclical, although there is a certain volatility of supply and demand, but from a long-term perspective, as a key component of people's daily life, MLCC market demand will continue to exist, and even with the upgrading of the industries and the "rising ship", so In the short term, the "fire and ice" will have limited impact on the overall industry. For local manufacturers, how to "take advantage of the east wind" in this special time period to strengthen their own technology and increase market share is perhaps the key point to consider.