The global economic data is weak, the end-consumer market is still difficult to get rid of the high inflation haze and the pressure of interest rate rise, while the epidemic, upstream and downstream inventory problems continue to spread, and the end of the year festive shopping season demand is afraid to fail. Therefore, TrendForce expects that the average BB Ratio (Book-to-Bill Ratio) of MLCC suppliers will decline to 0.81 in the fourth quarter due to the double attack of poor season and conservative attitude of ODM pulling goods.

Since November, Murata, Samsung, etc. have successively received small urgent orders from Netcom, motherboards, display cards and Chinese second-tier cell phone brand customers, showing that the motherboard and graphics card market has returned to a healthy level recently after the first quarter of this year when demand took the lead in the decline, coupled with the brand owners' continued adjustment of inventory. It is worth mentioning that the third quarter of China's spot market actively cut prices to grab a single trader, recently began to appear to stop quoting supply, resulting in some second-tier cell phone brand factory to urgently seek support from the original supplier, this move means that China's spot market inventory de-stocking signs near the end.

Even if the consumer MLCC price drop slowed down, but the first quarter of next year, the pressure to reduce prices will not be reduced

For the semiconductor industry, the terminal holds the final decision. The source of a series of crisis warnings since this year is because of the ebb in demand for terminals represented by consumer electronics. Taking cell phones as an example, global smartphone shipments in Q2 2022 were 291 million units, down 7.7% year-on-year, while smartphone shipments in mainland China were 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 level, 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 level 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 the TrendForce survey, from the first quarter of 2021 to the first quarter of 2022, the average price of consumer MLCCs fell by 5 to 10% throughout the year, and in the second quarter of this year, the price was reduced by 3 to 5% again in order to enhance the willingness to pull goods.

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

Although there is a chance that vicious competition between traders cutting prices and dumping goods will decrease after the fourth quarter, according to a survey conducted by TrendForce, as of early November, the average inventory level of MLCC suppliers is still about 90 days, while the average inventory of channel agents also falls in the range of 90 to 100 days, and the average inventory of large ODMs is still in the range of 3 to 4 weeks (about 30 days). The overall market (total agents, suppliers, ODM) average healthy water level of 120 days is still some distance away.

However, in the past, ODM should be close to zero inventory status, but the recent resurgence of the epidemic, ODM will be more difficult to let go of the epidemic preparedness inventory, coupled with the first quarter of next year, demand is likely to be affected by the downturn in economic activity, showing off-season more light market conditions. Therefore, ODM is not increasing the demand for orders, inventory does not reduce the attack, the huge inventory cost backlog, it is difficult to avoid ODM procurement will actively demand prices.

In contrast, according to TrendForce's survey, suppliers have experienced that even with two consecutive quarters of price cuts, it is difficult to push up ODM's pulling power. At the same time, in the face of earnings pressure, as well as most of the consumer-grade medium and low-capacity items offer is no longer profitable situation, suppliers have turned conservative attitude toward price reduction, and to hold the price level, hold profits so that the company can successfully survive the industrial winter is the priority.

Against the trend of expansion of production "fire"

Despite the weakness of the consumer MLCC market, but the manufacturers have not stopped the pace of expansion. In fact, in 2021, in the face of the continued expansion of the market gap, MLCC manufacturers have set off a wave of expansion, according to statistics, in 2021, Japan's Murata, Sunlight and other head enterprises to take the lead in expanding production, China's Taiwan's Guoguang Electronics, the mainland's three rings group, Fenghua High-tech, core sound micro, East Material Technology, Yu Yang Technology, followed by. By 2022, although the market situation has undergone a major shift, but the heart of manufacturers to expand production remains firm.

Kyocera, TDK, TAIYO YUDEN, local manufacturers such as Yuyang Technology, Micro Rong Technology, Xinwei Communication and other manufacturers continue to expand production, in general, the pace of domestic and foreign manufacturers to expand production is quite consistent.

In contrast to the consumer engine, which has been "stalled", the automotive sector has been full of power and is expected to become the next strong growth point, which can also be reflected in the above expansions, whether Kyocera, TDK, or Uyang Technology or Microelectronics Technology, most of their expansion projects will focus on high-end MLCC automotive grade 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.

Get rid of the downward impact of consumer product market demand, suppliers expand the layout of automotive MLCC capacity

Looking ahead to 2023, in the global economy is still weak, the international situation is complicated and the impact of the epidemic, the end consumer demand reversal schedule is afraid to be postponed. However, with the shortage of semiconductor ICs gradually easing, the automotive market will have a solid pulling power and become the main operational focus of suppliers next year. Samsung SEMCO with the group's 2023 grand strategic plan, from the semiconductor, panel, passive components, camera modules and other business units, fully expand the global automotive market business, 2023 automotive MLCC production capacity in Busan, Tianjin will be expanded by a total of 2 billion (monthly capacity); Murata automotive capacity expansion continues to grow 10% per year, after the second quarter of next year in Japan, Fukui, Izumo, and the Philippines plant to increase production by a total of 30 units. After the second quarter of next year, Murata will continue to increase production in Fukui, Izumo, and the Philippines to a total of 3 billion units (monthly capacity), with a total capacity of 25 billion units (monthly capacity) and a solid leading position. In addition, Kokusai is expected to expand 1.5 billion units (monthly capacity) in the second quarter of next year in Kaohsiung Dafabet plant with the introduction of Kemet automotive MLCC technology.

As part of the semiconductor industry, the MLCC market is also cyclical. Although there is a certain volatility in supply and demand, from a long-term perspective, as a key component that is indispensable in people's daily lives, the MLCC market demand will continue to exist, and will even "rise" with the upgrading of various industries, 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 improve market share is perhaps the key point to consider.

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