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2023/11/14
TrendForce reports that global demand for MLCCs is set to experience a period of slow growth from 2023 to 2024 With limited opportunities for industry growth, the demand for MLCCs in 2023 is estimated to be around 4193 trillion units, with a modest annual growth rate of about 3% This growth is primarily attributed to applications in smartphones, automotive electronics, and PCs Given the uncertain political and economic climate, OEMs and ODMs have adopted a conservative outlook, with a slight increase of 3% in MLCC demand expected in 2024, reaching approximately 4331 trillion pieces
After accelerating their orders at the end of the third quarter, OEMs have become more cautious in stocking up for the fourth-quarter holiday season, resulting in a slowdown in orders for ODMs Plans are underway to finalize pricing negotiations for 1Q24 by December 1st in preparation for the impending off-peak season MLCC suppliers, facing lower-than-expected demand during the peak season and concerned over the potential continued impact of global economic weakness in 1H24, are focusing on strict control of production capacity and inventory levels
Demand for smartphones, PCs, and notebooks is gradually improving from its previous low, but overall consumer confidence remains weak
Benefiting from a slight stabilization in PC/notebook demand in the third quarter, MLCC shipments in September reached a peak of approximately 434 billion units The launch of new smartphone models in the fourth quarter has led to an increase in shipments of related components, including PA modules and WiFi/5G chips from suppliers like AWSC and MediaTek, with a shipment volume of 410 billion units in October and an average BB ration of 094
However, recovery in industry confidence still lacks solid support from broader social and economic stability, leading to a slow increase in overall consumer demand MLCC demand in November is expected to decrease to 405 billion units, with the BB ratio dropping to 092
Industry demand stabilizes as suppliers boost production capacity, and Japanese suppliers Murata and Taiyo Yuden compete aggressively for orders
In response to strategic adjustments, Murata and Taiyo Yuden showcased impressive performances in their third-quarter financial reports Benefiting from increased operational capacity and a shift from loss to profit, as well as bolstered by Japan’s relaxed monetary policy, both companies experienced growth in revenue and profits Notably, Murata’s operating profit margin surged significantly, recording a 772% increase for the quarter Following a year of conservative pricing and financial stabilization, along with signals of a rebound across various industries Murata is planning aggressive pricing strategies starting from 1Q24, focusing on high-capacity, high-temperature, and high-pressure resistant products to strategically position itself as it battles it out for order acquisitions in 2024
Samsung and Yageo have also significantly reduced the prices of their high-end MLCC products, ranging from 10u to 47u X5R–X6S, with an average quarterly price reduction of about 3–5% Therefore, TrendForce believes under the expectation of slow growth in the MLCC industry, suppliers’ breadth of product applications and the financial resilience of their operations will be critically tested in 2024
For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email the Sales Department at SR_MI@trendforcecom
For additional insights from TrendForce analysts on the latest tech industry news, trends, and forecasts, please visit https://wwwtrendforcecom/news/
TrendForce will launch our offline seminar on the 14th of December (Thursday) at Tokyo Bay Ariake Washington Hotel, during the time of SEMICON Japan This event will mainly focus on the dynamics and foresees in the 2024 tech market, including the memory, the semiconductor industry between Japan and Taiwan, foundry capacity change, and automotive and consumer electronics sectors, for the visitors’ attendance, please contact alanchen@trendforcecom or angelaliao@trendforcecom; the media attendance please contact estherfeng@trendforcecom
2023/07/13
In the third quarter of this year, as global inflation gradually cools down, market inventories appear to be heading toward stability, driving ODMs to resume their conventional procurement rhythm TrendForce reports that MLCC suppliers are also experiencing a resurgence, with their monthly average BB ratio—a key market indicator—rising from 084 in April to 091 in early July In tandem, total shipment volume saw a remarkable 12% growth, climbing from 345 billion units in March to 389 billion units in June
TrendForce reveals that the MLCC industry, having weathered market inventory adjustments and capacity shifts in 1H23, has seen its BB ratio and shipment volume gradually grow from the second quarter onwards This comeback marks an end to the industry’s downturn Industry experts are keen to observe how traditional peak season demands, back-to-school, and shopping sale promotions will influence the industry’s trajectory in 2H23
Driven by orders for internet infrastructure, AI servers, and Apple’s latest device, ODMs are looking to ramp up procurement in 2H23
The US government is set to allocate $42 billion from its infrastructure budget to build a high-speed internet network across the country by 2030 This initiative is expected to stimulate the growth of network companies including WNC, Sercomm, and Arcadyan, while also increasing RF/High Q MLCC shipments from companies such as Murata, Yageo, and Walsin Tech
Demand for AI has skyrocketed since the start of the second quarter This has been particularly visible in the use of GPUs A100 and H100 in generative AI, propelling Nvidia’s performance While the scale of these orders is smaller compared to those for enterprise servers or data centers, they have nonetheless spurred ODMs like Foxconn, Wistron, and Quanta to increase their procurement of advanced MLCCs (1u and above high capacitance, X6S & X6R high temperature resistant) from companies like Murata, Samsung, and Taiyo Yuden
In another significant development, Apple’s much anticipated iPhone 15 is slated for release in late Q3 Major ODMs Foxconn and Luxshare began their preparations in late June While the order volume forecast is expected to be on par with the same period last year, it has nevertheless caused a gradual increase in monthly shipment volume for Japanese companies Murata and Taiyo Yuden Orders for internet infrastructure, AI servers, and the new iPhone 15 pushed Murata, Taiyo Yuden, and Samsung to outperform their break-even point (BB Ratio 1) in early July
OEMs are cautious in stocking up, order visibility is limited, and suppliers maintain strict control over capacity utilization rates
TrendForce observes that orders for mobile phones and notebooks have picked up since 2Q23 This rise in demand is matched by a concurrent normalization of inventory levels, encouraging both brands and ODMs to stabilize their inventory procurement activities However, OEMs have adopted a more guarded approach to their order planning The prevailing strategy involves dynamic inventory management, characterized by an influx of urgent and short orders rather than embracing a bullish outlook As the industry moves forward with cautious optimism, suppliers are strictly controlling capacity utilization rates to maintain stability in the face of fluctuating demand An impressive 90% utilization rate has been reported at Japanese facilities for Murata, TDK, and Taiyo Yuden However, other suppliers, especially those operating in China, show more modest figures, with utilization rates hovering between 60 and 70%
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/
2023/05/18
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/
