MLCC ushered in a new round of price increase cycle, and local manufacturers accelerated production expansion and ushered in golden development

According to Jiwei.com, "industrial rice" MLCC has started a new round of price increase cycle since the second half of last year, led by industry giants Murata, TDK, Samsung Electro-Mechanics, etc. Industry analysts believe that this round of price increase is mainly driven by the increase in upstream raw material prices, as well as the unexpected demand for downstream 5G mobile phones, the recovery of the auto market, and the continued rapid growth of the electric vehicle market; in addition, the demand for passive components will remain high in 2021, and the industry will usher in a hot trend of rising volume and price.

According to Jiwei.com, Samsung Electro-Mechanics officially raised the prices of some MLCCs in early March, with an increase of 10%-26%. The price increase notice officially took effect on March 1. Yageo, the leader in passive components, issued a price increase notice to its clients in early March, with chip resistors and MLCCs expected to increase by 10%-20%. Previously, Yageo had already raised the prices of tantalum capacitors and chip resistors. Walsin Technology also recently issued a notice to increase the MLCC quotation by 30%-40%.

A relevant person in charge of Sanhuan Group told Jiwei.com that the current price increase of MLCC in the market is mainly in the medium and high capacity segments, and they have no plans to increase prices for the time being.

MLCC sets off a new round of price increase cycle

Compared with other passive components, most categories of MLCC do not require personalized customization, but are general-purpose products, and their prices fluctuate significantly according to market supply and demand. Looking back at the development of the global MLCC market in the past 20 years, it has roughly experienced four significant price fluctuations.

From 2000 to 2004, during the Internet bubble and digitalization period, the early Internet wave and the large-scale popularization of black-and-white mobile phones were the main driving forces for MLCC demand. The imbalance between supply and demand drove the price increase of MLCC, but later, with the bursting of the Internet bubble, a large number of orders led to excess inventory. However, with the digital promotion of application terminals such as laptops and color feature phones, the demand for small MLCCs rebounded, which led to tight upstream production capacity and shortages and price increases. From 2008 to 2010, the financial crisis and the subsequent economic recovery, on the one hand, the economic crisis caused the rapid shrinkage of various application industry chains and a large amount of inventory clearance; on the other hand, since 2009, the global economy has recovered rapidly, downstream demand has risen, and a large amount of inventory replenishment demand has been generated, which has once again pushed up product prices.

From 2013 to 2015, smartphones quickly became popular, with smartphones represented by Apple and Samsung becoming widely used in a short period of time, and shipments growing explosively. In addition, the increase in the number of MLCCs installed in each mobile phone became the main driving force for demand, pushing up product prices significantly.

From 2017 to 2018, the demand for various application terminals increased. Since 2016, the main Japanese and Korean manufacturers have begun to withdraw from the low-end and mid-end markets and turn to high-value products such as automotive and industrial control, thus creating an attack gap for low-end and mid-end MLCCs. In addition, the explosion of Samsung Note 7 caused Samsung Electro-Mechanics to stop production of MLCCs for three months, and strengthened quality management for subsequent MLCC deliveries, which further lengthened the delivery cycle, resulting in further price increases. In addition, the single-machine consumption of iPhone X reached 1,100 pieces that year, and the demand for ultra-small MLCCs increased significantly. It was difficult for Taiwanese and mainland manufacturers to fill the market gap in the short term, so that the price of MLCCs was pushed up all the way.

Behind the above four price increases of MLCC, the main driving factor is the "imbalance" of supply and demand. However, for this round of price increases, the MLCC market took a sharp turn for the worse in 2019 after experiencing high prices in 2018. The unit price of MLCC fell by as much as 15% in the first half of the year, and the inventory levels of manufacturers and agents were high. Affected by the epidemic, the stay-at-home economy has exploded on a large scale. Driven by the global trend of working from home and online education, there is a strong demand for laptops and tablets.

In addition, with the recovery of the auto market and the increase in electric vehicle shipments, some manufacturers have experienced product delivery delays since the fourth quarter of last year, and some manufacturers have begun to slightly increase prices. Since the beginning of this year, the MLCC market has been "rising". In addition to the above-mentioned international giants, in Shenzhen Huaqiangbei, the prices of both MLCC and resistors have risen by 25%-30% compared to before the Spring Festival.

According to a well-known domestic MLCC supplier, the company is now full of orders and in great demand, with production in short supply. Products with relatively high demand are mainly communications products, such as base stations, Netcom, mobile phones, industrial control, etc.

As for the reason for the price increase, the supplier said that it was mainly because bulk commodities were also rising in price. The industry leader's demand for MLCC price increase itself was reasonable, but it was still uncertain whether the price would continue to rise. If bulk commodities continued to rise, the industrial chain would also be affected.

Northeast Securities research report pointed out that due to factors such as trade frictions and the epidemic, the trend of the entire industrial chain shifting to the domestic market has been accelerated. In addition, due to the cautious expansion strategy of international giants and the gradual reliance of upstream and downstream customers on domestic supply chains, domestic MLCC manufacturers have ushered in a golden period of development.

Domestic MLCC production expansion will achieve substitution in many fields

From the perspective of global competition, the MLCC supply pattern is mainly centered on Japanese and Korean manufacturers, who not only have advantages in technology and scale, but also have a rich range of MLCC products. According to statistics, Murata, Samsung Electro-Mechanics, Taiyo Yuden, Yageo, TDK, and Huaxin Technology account for 84% of the global market share.

According to ECIA data, among the top 9 MLCC manufacturers in the world in 2019, 3 were Japanese manufacturers, with a combined market share of more than 53%; Taiwan's representative manufacturers Yageo and Walsin Technology had a combined market share of approximately 7.6%; mainland China's representative companies Eyang, Fenghua High-Tech, and Sanhuan Group had a combined market share of 7.5%.

However, as international giants such as TDK, Murata, and Kyocera gradually withdrew from the low-end and mid-range markets of some low-profit specifications such as 1206/0805/0603/0402 from 2016 to 2018, these 104 and 105 capacitance values ​​are the most common material numbers and are widely used in home appliances, industrial control and other fields. At this time, domestic manufacturers seized the opportunity and took advantage of the trend. At present, the product technology in the low-end and mid-range fields can meet most of the domestic needs and have initially met the industrial conditions for domestic substitution.

It should be noted that as Japanese and Korean companies enter the mid- and low-end markets, domestic manufacturers such as Fenghua Hi-Tech and Sanhuan Group are also expanding the production capacity of conventional products accordingly. However, due to the gap in the original production capacity, the supply of medium and large sizes and low-capacity conventional products is in a state of obvious contraction. Moreover, from the application end, applications such as smart home appliances are concentrated in 0805, 0603, 0402 and 0201, and industrial control is concentrated in medium and large sizes such as 1206, 0804, and 0603. Products of 0603 and above still occupy more than 35% of the market share under the situation of continuous expansion of demand. It is expected that there will be a certain gap in the supply of some medium and large-sized conventional products of 0402, 0603, and 0805 in the future.

In addition, with the increase in the volume of 5G application terminals, new application terminals such as autonomous driving, IoT, and drones will emerge in multiple places and greatly increase the demand for conventional material numbers.

The above-mentioned supplier also told Jiwei.com: "The models supplied by the company are mainly general-purpose, and the demand for general-purpose MLCCs is the largest, with the main models concentrated in 0201 and 0402, etc."

For general products, production capacity determines the industry's influence. For example, industry giant Murata has an absolute advantage with an MLCC production capacity of approximately 150 billion pieces per month, while domestic companies such as Fenghua High-Tech and Eyang Technology have a production capacity of approximately 20 billion pieces per month, and Sanhuan Group has a production capacity of approximately 12-15 billion pieces per month.

At present, Fenghua High-Tech currently covers the full size of MLCC, and its technology and production capacity are in a leading position in the country. Moreover, with the completion of the new base project for the high-end chip multilayer ceramic capacitor industry, the monthly production capacity will be increased by approximately 45 billion units (annual production capacity of approximately 540 billion units) when it reaches full production in 2024.