Rising tantalum ore costs could push up capacitor prices in '09
By James Carbone -- Purchasing, 11/13/2008 7:00:00 AM
Buyers could face price increases for tantalum capacitors after the first of the year because of higher tantalum ore and powder costs, according to suppliers.
Tantalum mining companies say that they plan to increase the price of tantalum ore in January. "They say electronics is a small portion of their business and they can't make money," says Dan Lane, marketing manager at AVX Corp. in Myrtle Beach, S.C. "They are threatening to raise prices for tantalum ore 80–85% at the first of the year."
Mining companies provide tantalum ore to refiners which produce tantalum powders used by capacitor companies. While tantalum ore prices may increase 85%, that doesn't mean capacitor prices will rise 85%. How much prices increase remains to be seen, but price increases may not be across the board and may affect parts in larger cases sizes that use more powder or high purity material.
"If it is a higher purity material, the price goes up more. Typically those materials are used in lower equivalent series resistance (ESR) parts and is a direct reflection on what we are putting into the part," says Lane.
Prices for some larger case size parts increased this year after refiners increased powder prices 20–40%, he says. As a result, AVX increased prices 20–30% for larger case size parts.
Commodity parts in smaller case sizes won't be affected as much because they are likely to be designed out of products if the price is too high. "We know that the market will give way in the lower capacitance, high-value segment to high capacitance/voltage ceramics because the pricing is much lower," says Lane. However, the higher end of the market requires more performance which ceramic capacitors cannot deliver.
Whether tantalum ore prices increase 85% remains to be seen. Prices may go up, but perhaps not that high, according to some suppliers.
"We have a good understanding of what we think will happen at the first of the year," says Lane. "We are not concerned about a major increase coming in January. We buy quite a bit of powder so we can sustain it for a while. Unless something dramatic happens we will be OK for a while," he says.
Lane notes that mining companies and refiners are demanding long-term contracts. Lane says suppliers will absorb some of the increases.
"We have taken prices to the point where we feel we can sustain a reasonable margin. It is a big unknown," he says.
Besides expecting higher prices, buyers can also expect suppliers to focus more on lower profile lower ESR parts, driven by makers of handheld devices such as cell phones and portable music players, which use smaller case size polymer capacitors. These are low profile parts about 1 mm in height.
Computers use larger size, lower ESR parts, which carry higher price tags. Computers, especially laptops, are the biggest user of tantalum capacitors followed by telecommunications equipment and cell phones, says Lane.
Overall, the tantalum capacitor market will likely be flat to down over the next several years. Some suppliers expect the market to slip 4% in 2009 due in part to more equipment using ceramic capacitors for price reasons.
"We've seen smaller case size tantalum capacitors replaced by ceramic capacitors wherever they can be," says, David Valletta, senior vice president of global strategic sales for Vishay Intertechnology in Malvern, Pa. "Multilayer ceramic capacitors (MLCC) have been encroaching on tantalums forever and tantalums have encroached on aluminum capacitors."
One growth area is wet tantalum capacitors, a market that has been driven by military and to some degree industrial such as the down-hole drilling market, says Valletta. As the name implies, wet tantalum capacitors contain a liquid and use a wet electrolyte system, typically sulfuric acid, while solid tantalum capacitors use a manganese dioxide (solid) electrolyte.
The wet electrolyte system can support higher voltage ratings (up to 125v compared to 50v maximum typical for most solid capacitors), and lower leakage current, according to AVX.
Suppliers say they are ideal for avionic power and engine control systems and various industrial applications. The most common usage is for power supply input and output filtering. The major benefit of wet tantalum is their high bulk capacitance and extended voltage range, for use in high power designs where solid tantalum capacitors are not always suitable.
Valetta says besides strong demand for wet capacitors, Vishay also sees healthy demand for its MicroTan 298 D series, especially in the K case, an 0402 size. The part has high CV (capacitance/voltage). "Demand is growing for it because of its small size," he says. The part compares to an MLCC part, but there is a performance advantage.
"It is finding its way into mobile phones and in computers it is used in graphics cards," says Valletta.
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