Expect longer ceramic capacitor leadtimes as demand picks up
As demand picks up in the second half, leadtimes for MLCCs will stretch.
Gina Roos -- Purchasing, 6/18/2009 2:00:00 AM
Buyers need to keep a close watch on leadtimes for multilayer ceramic capacitors (MLCC) as manufacturers have cut back on production capacity because of weaker demand. If demand picks up in the second half, leadtimes for MLCCs will stretch.
In fact, there are signs that demand for MLCCs is already picking up in Asia, specifically China, says John Denslinger, executive vice president sales and marketing at Murata North America in Smyrna, Ga. He expects demand to slowly trend upward this year, but says the company's ability to increase production capacity will lag.
Denslinger says while installed machine capacity is adequate to cover any increase in demand over the next few years, it will take roughly three months to train operators at the desired productivity and quality levels. He expects capacity to come back online gradually over the next six to 18 months.
That view is shared at Vishay Intertechnology. The key is keeping capacity in line with order rates, but the negative effect of that is when demand increases, there will be shortages, according to David Valletta, executive vice president worldwide sales for Vishay Intertechnology in Malvern, Pa. "It takes time to get that capacity up to speed," he says.
Valletta also agrees that the market has started to stabilize and increase slightly in the past month. "Everyone is seeing the same thing especially in Asia, although no one knows how long it will last," he says.
MLCC leadtimes hover around the four- to six-week range, but there are signs that leadtimes are starting to stretch. As examples, deliveries for Murata's GR standard capacitor in the 0201 package size has moved out to eight to 10 weeks from six-eight weeks, and deliveries for the HiCap line has extended from eight weeks to 10-12 weeks. Denslinger expects the longer leadtimes will continue until more capacity comes online.
MLCC suppliers say aggressive pricing has been a big challenge as price reductions have been aggressive for MLCCs compared to other product areas, Valletta says.
The cost of metals and energy are still up, but pricing will likely keep the same downward pace in 2009, says Denslinger. The ceramic capacitor market is expected to decline nearly 9% this year, reaching $6.3 billion down from $6.9 billion in 2008, according to market research firm Decision in Paris.
Still, some capacitor makers have high expectations. Murata's goal is to achieve the same sales as last year. However, this will be difficult. Due to pricing pressure, Murata's unit volume will actually have to outpace the 2008 sales rate to realize the same sales objective, Denslinger says.
Denslinger says three things are fueling most of the growth: replenishment of some depleted inventories, Chinese stimulus encouraging domestic consumption of consumer goods, and competitors unable to react to quick demand needs.
In high-reliability markets, Valletta says fixed telecom, military and medical markets have held up, although they aren't immune to the downturn.
Energy and electric vehicle-related products are fast-growing segments but the volume isn't there to offset declines in automotive, which is a major market for Vishay's MLCCs, says Valletta. "Anything infrastructure-related will have good growth potential over the next few years, and alternative energy-related projects will be part of that," he says.
With most of the U.S. stimulus targeted at the smart grid, Murata's current product lines can benefit globally from infrastructure investments, says Denslinger. Murata is looking to expand into other technology areas that would give it new products for other stimulus targets such as solar and wind.
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