Pulse 2018 "resistance capacity" big shortage

As the old saying goes, "the business of beheading is done, and the business of losing money is not done." From the technology, domestic manufacturers do not do high-end MLCC, maybe one day low end capacity will be eliminated, domestic MLCC is not doing charity, do not dare to invest in MLCC the most missing specifications such as 0402, 0603 capacity of the product can also be understood.


The price cycle of China's electronic components industry is generally 4-6 years. Since the beginning of this century, there has been a peak in 2000, 2007, 2011 and 2015. Since 2016, the upper reaches of the electronic industry chain have been rising, the main reason is that the prices of bulk products and raw materials have risen, and the withdrawal of some backward production capacity causes the imbalance of supply and demand. For the electronics industry, the most important concern in the last 1 and 2 years is the increase in the price and the shortage of components, in addition to the rise in the price of panel, memory and wafer, especially the "resistance capacity" of passive components is the most serious.


The rise of house price, MLCC two months price difference is more than ten times
The passive components are the most basic electronic materials in the electronic manufacturing industry. The annual use amount is more than 100 million. The price is cheap, the amount of material is large and the general type is most. It belongs to the niche market, the price fluctuation is low, and the customer concentration is high. However, in recent years, the price of solid capacitor and aluminum electrolytic capacitor has been rising, and the general ceramic capacitor MLCC with the largest demand is taken as an example. Since the end of 2016, the price has doubled or even more than ten times as much as today. In the 10-11 months and two months of 2017 alone, we bought 15 times the price of Samsung MLCC materials from the spot market, and the two month price difference reached US $2 million. This will undoubtedly increase the purchasing cost for ODM manufacturers. Samsung motor has said that more than 40 domestic customers want to buy goods, especially some ODM/OEM manufacturers even make two times the price, but still can not guarantee supply. MLCC price increases faster than all kinds of financial products, and the price of bitcoin can be comparable.

Look at the surface mount general ceramic capacitors in the table. This is MLCC. According to the shipping assessment issued by Fu Chang electronics, a component agent, at the end of 2017, the MLCC will continue to maintain a serious shortage in the future.

Generally speaking, the market is off season in the first half of the year. Agents and traders do not dare to hoard large quantities of goods, and prices will gradually go down. But the fact is that the delivery time of passive components is still dragging on, and prices are still scarce. Many practitioners believe that shortages will continue in 2018, and capacity will be eased until 2019.

Trade war between China and the United States or Chaoshan fry? Why is MLCC skyrocketing?

According to customs data, in 2017, China imported MLCC products of 5 billion 620 million US dollars, an increase of 7.6%. In 1-2 months of 2018, MLCC imports amounted to US $1 billion, an increase of 35.5% over the same period last year of US $738 million. It is said that last year, Taiwan's major generation factories such as Ren Bao and Quanta went to Japan to sweep goods and carry memory. At present, Japanese companies have basically monopolized the high-end MLCC market. The top five manufacturers, such as Murata and TDK, occupy close to 90% of the market share, of which the MLCC production capacity of the village occupies three. Murata and TDK had more than ten billion passive components in 2016. In the past two years, Samsung motor has also been very aggressive in the field of MLCC, accounting for nearly 20% of the total.

However, it is worth mentioning that in 2017, the village announced its withdrawal from the conventional MLCC market, and the production direction turned to the ultra small and high performance field, making the supply side of the MLCC market shrinking again. TDK withdrew from the low-end MLCC market in the second half of 2016, resulting in a shortfall in the capacity of 700 million orders. Subsequently, the Japanese KYOCERA issued a shutdown notification, for the 0402, 0603 sizes of 104, 105 specifications stop production, is recognized as the market is the most missing specifications, KYOCERA withdrawal of the specification, will make the MLCC common material shortage frost. There are distributors that KYOCERA exit specifications are the largest increase, the market is the most missing, the largest amount of specifications, KYOCERA's stop action "like another TDK out of the general MLCC".

This has given a good profit to the middle and low end MLCC manufacturers, the latest news is that after April 1st Taiwan Guo giant's price rise again, up 0201 to 1206 specifications of the MLCC, the average rise to 40 - 50%. In 2017, the national giant had already increased its price four times, while the national giant was not the main supplier in the MLCC field, but also Hun Shen Tang, Chi Li Xin, Mei Jie, Mei Lei and so on. China's local suppliers, including Chaozhou Sanhuan, Fenghua hi tech, Hua Xinke and Dafang, all have different prices. However, the problem is that the production capacity of domestic MLCC is not enough to undertake the capacity vacancy of Japanese and Korean manufacturers, it can be said that the development of domestic enterprises in the field of passive components is too slow.

The reason for the increase in passive component manufacturers is that the prices of a number of raw materials and labor costs continue to rise. There are a lot of people outside the industry who think that with the development of technology, the cost of components will be lower and lower, so the price increase is a bubble and should not continue. There are also a number of Lenovo rich netizens who have turned the recent Sino US trade war out of the US sanctions. A lot of people in the industry think that behind the price increases, there are "mysterious capital" of Huaqiang North in the back of stock speculation and speculation, this time is the Chaoshan people back pot. It is said that in Huaqiang North, hoarding capacitors and frying capacitors becomes a passion for many traders to "explode overnight". Several times the original factory price increases, tight supply, traders who can get goods, hoarding will be able to sell well. It is said that even the stores that sell rice flour make money in the sideline industry. There is even a burst of information that the original MLCC factory also has an insider to participate in the "speculation" game, such things have happened in the mobile phone main chip, storage area, here is not detailed.

It can not be said that everyone is wrong, in the final analysis, passive components are common parts, plus long-term shortage, capacity shortage, is a very suitable for selling products, so it is also understandable to attract a large amount of money to come in. However, the manufacturers of passive components are mainly Japanese and Korean manufacturers, so the United States has a bit of a miscarriage. The United States now has a passive component manufacturer Vishay can supply MLCC, resistance market accounts for about 2%, the inductance market accounts for about 2.24%, production capacity is not enough to affect the industry. In addition, the product quality of Vishay is not poor, but the output is small, the price is high, and the time of delivery is long. It can't be caused by the emergency list. For the large standard MLCC, the customer will not give priority to it.

In March 21, 2018, the European Commission decided that 9 Japanese enterprises had a price monopoly on Aluminum Electrolytic Capacitors / electrolytic capacitors in 1998-2012 years, and a total of about 254 million euros was fined. In January 2018, the Singapore Competition Commission also made a monopoly penalty of about RMB 100 million yuan for the price monopoly of 5 aluminum electrolytic capacitors in 1997-2013 years. I wonder if the Chinese government will also make some monopoly penalties.

Which is the most true reason?

The author thinks that there are several important reasons for the shortage.
1. the annual average price of normal electronic components is 5%-10%, but the price rise period of MLCC is once every 3-5 years. Compared with active components, the technology progress of moving components is relatively slow. Active components have always followed Moore's law, which means that every 18~24 months will double the performance and double the performance. So PC, mobile phones and other electronic products began to depreciate from the first day of buying their hands. But passive components do not follow Moore's law. Transistors and memory units can operate at the electronic level in principle, while analog signals processed by passive components or board level digital signals, such as antenna processing radio frequency signals, input signals of A/D conversion, hundreds of watts of power pulses reaching a single chip in a clock cycle, can not be reduced arbitrarily. In spite of a hundred years of history, the difference between the active component and the active component can be reduced by the Moore's law, and the technological progress of passive components is far slower than the active component. Although Japan and South Korea manufacturers will shift rapidly to high-end MLCC in 2018, the gap between the middle and low end market is still huge. Since 2005, the market share of 1206/0805/0603/0402 and other large size MLCC has continued to decline, and the market share of 0201/01005 or even smaller size MLCC has continued to grow, and it is expected to break through 40% in 2025. At present, there are less than 20 enterprises to master the 01005 type MLCC technology in an all-round way. The price of the product reaches 145-178 yuan per thousand pieces, more than 10 times the specification of 0402/0603, and the leading enterprises with technical advantages enjoy high profit.


2. passive components are not a capital driven industry. Unlike the chip industry, which costs tens of billions of dollars in capital expenditure, the 16 year capital expenditure of the passive component leader, Murata and TDK, is only US $1 billion 536 million and US $1 billion 431 million. Therefore, the driving factors behind passive components are not technology and capital.
3.MLCC manufacturers reduce production capacity, affecting upstream suppliers, a vicious circle. The raw materials of MLCC core include ceramic powder material, internal electrode material (mainly nickel slurry) and external electrode material (mainly copper paste) three parts. Taking ceramic powder in the upper reaches of MLCC as an example, the main suppliers are Japanese chemical and national porcelain materials. In the state of stable growth and balance of supply and demand in the long term, the state of supply and demand balance will be seriously broken and the tension of market will be aroused. In addition, the raw materials of passive devices are affected by the recovery cycle of commodities. Since the 2016Q2 quarter, prices have risen generally, and the production costs of passive device manufacturers have been increased. With the increasing capacity of MLCC, the proportion of nickel electrode slurry in the cost of MLCC raw materials is increasing and becoming the first raw material. From the second half of 2016, the copper wire, tin, iron cap, component rod, paint and packing cartons have risen in varying degrees. The price of raw materials has risen, leading to the further extrusion of profit space. The leading enterprises begin to move down the cost, leading the first wave as a result of the increase of material cost. Price rises. BME (base metal electrode), which is widely used in MLCC technology, has accounted for more than 90% of all MLCC. The development of BME MLCC electrode technology in China is lagging behind, and internal electrode materials and external electrode materials are basically dependent on imports. In particular, the nickel and copper paste used in high-end high capacity MLCC are monopolized by foreign countries for a long time due to their difficulty in technology. At present, the main pulp manufacturers are Japan Zhao Rong, Sumitomo, and so on.


4. last is the real demand. The current supply side demand is mainly from wireless charging, LED lighting, automotive electronics and power management. The future demand is the Internet of things, AI and the upcoming commercial 5G. Historically, passive components have been upgraded in 1988 and 2000 respectively, mainly due to the emergence of PC and mobile phone products. The start of the 2017 demand is mainly due to the promotion of cars and high-end phones, such as iPohone 7 using 420 passive components / support, iPhone 8 and iPhone X to 600~620, single MLCC consumption will increase 80%-200%; with HUAWEI, OPPO and vivo, millet and other domestic mobile phone brands began to focus on high-end models, The consumption of high-end MLCC is more than that of low end models, while the demand for passive components increases by 5 times on the new energy vehicles. It is believed that 5G will bring about a new wave of demand growth in 2020.


What do agents think about the lack of passive components?

The shortage and price increase of MLCC not only affect manufacturers, but many small and medium-sized agents are also hard to get goods. There are MLCC factory, most of the source is sent to EMS and OEM manufacturers, generally the mainstream agents are not hoarding goods, only a few spot traders and traders have spot.  Murata's agent Xiang Hai began to discuss 2018 quotas with clients of OPPO, vivo and Jin Li instead of OPPO, vivo and Jin Li. After consultation, Murata planned to give about 80% quotas to the previous clients. It is understood that the current scale of electronic inventory in the Hunan sea can meet the needs of 1-1.5 months, and the supply of OPPO, vivo and other large customers can only be maintained to around January 2018.

As the world's largest passive component, discrete device, connector and electromechanical component professional agent, the global warehouse of TTI, which has been using "high inventory, low circulation" strategy, has a large amount of spot in stock all year round, and is also the agent of the most resistance and capacitance of all types of inventory in the world. Anthony Chan, President of the TTI Asia Pacific region, says it is not worried about the shortage, except that there are plenty of spot stocks, but also because there are plenty of TTI suppliers, and there are plenty of alternative options.

"In fact, as agents, we can probably estimate the shortage period, basically every 3~5 years, there is a round, not capacitance, MLCC is resistance. We will make preparations ahead of time to advise customers what may be out of stock. Because, because it is more sensitive, TTI knows what may be out of stock. At the same time, TTI also has a closed loop inventory reservation plan, which can share customer demand forecasts and automatically send replenishment information to suppliers. And generate inventory reservation to meet the unexpected peak demand of customers. On the other hand, the world's largest small volume spot vendor, Mouser, is also under the banner of TTI, so TTI will buy samples from Mouser to the customer, which can greatly shorten the customer delivery process.


In 2017, the low - volume market shortage made the Japanese and Korean giants unprepared, and of course, they would not be able to regenerate capacity again for these abandoned markets. Therefore, the strategic shift of Japan and South Korea has given Taiwan and continental companies opportunities. Since Japan and South Korea manufacturers are currently reducing their production capacity, why do they not increase the purchase of domestic manufacturers? That's because the standard MLCC capacity released by Japanese manufacturers is not good enough. From the market point of view, the mainland MLCC market share is not more than 8%, even if the expansion of 30% capacity, only increased by 2.4%, and the market demand gap in 25%~30%, to relieve the gap is not helpful.
But as a distributor that concentrating on passive components and connectors, he also mentioned that passive components have increased the difficulty of inventory management, so the most likely problem in the supply chain is passive components. "It's really different to be active and passive. Passive components account for 85% of the material in the plan, but the value is only 7%." ANTHONY CHAN said that this value of 7% passive components and very important, a motherboard of 100 materials, one can not produce one. So now the general factory will let the strongest purchase to be responsible for the passive device purchase, because the passive material number is too much, and the shortage is also very serious. Take the new energy vehicle as an example, there are usually more than 8000 capacitors and resistors.

"We also see that China makes 2025, and the demand for production is higher and higher. The quality of products produced in China is higher and higher. People used to think that Chinese manufacturing is a cheap pronoun. Now HUAWEI's mobile phone quality is no worse than iPhone. " ANTHONY CHAN believes that when China's manufacturing to high-end transformation, the components of the inside must be more and more high-end, so he is optimistic about the future of passive components in the Chinese market. "We would also like to see the rise of China's local devices."

From technology, domestic manufacturers can not do high-end MLCC, low end MLCC seems to be rising at the moment, but compared with the cost of expanding production, the profit is not high. At present, including Fenghua hi tech, national giant, Samsung motor and solar power, they are announcing new capacity, but most of them invest in high-end capacity. Perhaps one day low end capacity will be eliminated, domestic MLCC does not do charity, do not dare to invest in MLCC the most missing specifications such as 0402, 0603 capacity of the product.

As an old saying goes, "the business of beheading is done, and the business of losing money is not done."