If one word is used to describe today's chip industry, it is bound to be "ice and fire". Some time ago, it was hard to ignore the overwhelming reports. However, if we look at the whole semiconductor industry, it is intertwined by "ice" and "fire", not only one field of chips, but also components.

MLCC has always been known as the "rice of electronic industry". As one of the indispensable passive components in the modern electronic industry, it seems that it has ushered in a new round of inventory crisis after the shortage and price increase last year. However, even so, the manufacturers' pace of expanding production has not stopped …

The "ice" of falling prices

For the semiconductor industry, the terminal has the final decision. Since this year, the source of a series of crisis warnings is the ebb of terminal demand represented by consumer electronics. Take mobile phones as an example. In Q2 2022, the global smartphone shipments were 291 million, down 7.7% year-on-year, while the smartphone shipments in Chinese mainland were only 67.4 million, down 10.1% year-on-year.

Originally, the demand for mobile phones, laptops, tablets, televisions and other terminals was sluggish, but the demand for data centers and Netcom industries could still hold up. However, with frequent wars and tighter consumption, these two types of demand also capsized, and the inventory of passive components factory in the second quarter increased greatly compared with the same period of last year. The sharp tightening of the consumer market has led to the decline of MLCC demand for consumer regulations, and the rising of market inventory.

From the perspective of inventory level, the inventory of terminals, channels, and original factories in the passive component industry chain is relatively high. Most of the inventory of major MLCC manufacturers is between 1.5-2.5 months, and the inventory level of downstream agents is higher than the original inventory. There are more factories, the longest can be up to 4 months. TrendForce research shows that the average inventory level of consumer MLCCs in each size is more than 90 days.

The high inventory makes agents' purchase intention decline, and in order to stimulate their desire to buy, the price of MLCC products keeps falling. According to the TrendForce survey, from the first quarter of 2021 to the first quarter of 2022, the annual price of MLCC dropped by 5 to 10% on average. In the second quarter of this year, in order to improve the willingness to pull goods, it was lowered by 3 to 5% again, while the price of some low-grade consumer regulations MLCC even touched the material cost. It is estimated that the average price of consumer regulations MLCC will drop by 3 to 6% in the second half of this year.

In addition, from the overall situation of the industry, the crop activity rate of MLCC major manufacturers dropped to 70%-80%. According to the estimation of the recent conference of major manufacturers, Guoju's standard product production capacity decreased by 10% in the third quarter, and the average crop rate dropped to 50 ~ 60%; In the first half of this year, Hetang was loaded with niche products, and the standard products accounted for about 80%. In the third quarter, the price reduction will be replaced by adjusting the crop rate, and the crop rate of standard products will be reduced to 70 ~ 80%.

No matter the sales volume in the terminal market, the price and inventory of MLCC products, or the performance reports of manufacturers, it shows that the current MLCC market is not optimistic.

The "fire" of expanding production against the trend

Although the MLCC market is showing signs of weakness, manufacturers have not stopped expanding production. In fact, in 2021, in the face of the continuously expanding market gap, MLCC manufacturers have set off a wave of production expansion. Yuden and other leading companies took the lead in expanding production, followed by Yageo Electronics in Taiwan, Sanhuan Group, Fenghua Hi-Tech, Xinsheng Micro, Dongcai Technology, and Yuyang Technology in mainland China. By 2022, although the market situation has undergone major changes, the manufacturers' intention to expand production remains firm.

On August 17, Kyocera announced that it plans to invest 15 billion yen to build a new plant in the Kagoshima Kokubu factory area, increasing MLCC production capacity by about 20%. Factories in Thailand and other places are also increasing the production of MLCC. The goal is to achieve MLCC revenue of 200 billion yen in fiscal 2025 (until March 2026), which is equivalent to 2 times that in 2021.

In addition to Kyocera, TDK also announced in May this year that it has decided to build a new production building on the grounds of TDK Electronics Factory Corporation's Kitakami Plant (Kitakami City, Iwate Prefecture, Japan), focusing on high-reliability automotive products to enhance MLCC production.

After Taiyo Yuden's large-scale expansion last year, in August this year, the MLCC ceramic capacitor expansion project with an investment of 1.058 billion yuan by Taiyo Yuden (Guangdong) Co., Ltd. participated in the centralized ground-breaking ceremony in Dongguan. In addition to Taiyo Yuden, there are local manufacturers Yuyang Technology who expanded the MLCC project in Dongguan. After the construction of the MLCC project with an annual output of 500 billion pieces of Anhui Yuyang, Yuyang Technology expanded its MLCC production capacity in Dongguan, Guangdong. On August 5th, the groundbreaking ceremony of Dongyuyang Industrial Vehicle Grade Ceramic Capacitor Project was held in Dongguan. The project will introduce 5 advanced MLCC manufacturing production lines.

According to the news, Yuyang Technology plans to build a new East China production base and a new South China production base in the same city. The new East China production base is located in Chuzhou, Anhui Province, with a total investment of 2.3 billion yuan, a planned annual production capacity of 500 billion pieces, and the construction of a full-scale full-series MLCC production line, production applications It is suitable for MLCC products such as consumer electronics, embedded chips, and automotive grades. The new South China production base is located in Dongguan, Guangdong, with a total investment of 1 billion yuan and a planned annual production capacity of 220 billion pieces. It will build a new R&D center and a full-scale full-series MLCC production line to produce high-end MLCC products used in 5G, precision medical, automotive electronics and other fields.

In general, the pace of expansion of domestic and foreign manufacturers is quite consistent.

write at the end

As a part of the semiconductor field, MLCC's market is also cyclical. Although there is a certain volatility in the supply and demand relationship, from a long-term perspective, as an indispensable key component in people's daily life, the market demand for MLCC will continue to exist. Even with the upgrading of various industries, "the tide will rise", so the "interweaving of ice and fire" in the short term will have a limited impact on the overall industry. For local manufacturers, how to "take advantage of the east wind" to strengthen their own technology and increase market share in this special time period may be the key point to consider.

source: Semiconductor core smell