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2022/11/07
The latest research from global market intelligence firm TrendForce finds that the usual demand surge related to the year-end holiday season is not materializing during this second half of the year due to several factors First, the data about the global economy continue to show a negative outlook, and the consumer electronics market is unable to shake off the constraining influence of high inflation and rising interest rates Furthermore, at the 20th National Congress of the Chinese Communist Party that was held this October, the leadership of the Chinese government made it clear that the strict zero-COVID policy will remain in force Lastly, ODMs are having problems lowering their inventories, and the whole supply chain from the upstream to the downstream is still experiencing inventory-related issues as well Hence, in view of the underwhelming peak season and ODMs’ cautious approach to stocking up, TrendForce estimates that the average BB (book-to-bill) ratio of MLCC suppliers will have slipped slightly to 081 in 4Q22
Starting this November, MLCC suppliers including Murata, SEMCO (Samsung), and Yageo have been receiving rush orders involving small quantities These orders are from China’s Tier-2 smartphone brands and suppliers for networking devices, motherboards, and graphics cards Among the various applications segments of the MLCC market, graphics cards was the first to experience falling demand in 1Q22 Therefore, through early and continuing adjustments, inventories of graphics cards OEMs have recently returned to relatively healthy level It is also worth mentioning that traders in the Chinese spot market were aggressively cutting prices so as to capture more orders during 3Q22 However, they have halted quote offering and held back their supply lately, thereby forcing some Tier-2 smartphone brands to place rush orders with MLCC suppliers This development indicates that the end is near for the inventory correction period in the Chinese spot market
Although Decline in Prices of Consumer-Spec MLCCs Has Eased, Downward Price Pressure Will Mostly Remain During 1Q23
There is a chance that the price competition among MLCC traders will moderate after 4Q22 Nevertheless, TrendForce’s latest market survey shows that MLCC suppliers’ average inventory level is staying around 90 days As for distributors in the channel market, their average inventory level presently comes to 90~100 days as well Turning to the major ODMs, their average inventory level still resides around 30 days (3~4 weeks) Taking all market participants (ie, distributors, suppliers, and ODMs) into consideration, the inventory situation of the entire MLCC market remains far from optimal (ie, at the average level of 120 days)
Previously, ODMs kept almost no inventory for MLCCs However, with the recent resurgence of COVID-19 outbreaks in China, ODMs are compelled to have some stock on hand so as to avoid a potential supply disruption Furthermore, economic activities are expected to be very subdued in 1Q23 This will impact demand and exacerbate the off-season slump With no tangible growth in orders and too much stock on hand, inventory-related costs will become much harder to bear Consequently, ODMs will inevitably be very proactive in seeking price concessions for MLCCs
On the other hand, TrendForce’s latest investigation finds that MLCC suppliers have realized that even after two consecutive quarters of substantial price reductions, there has been no turnaround in ODMs’ demand Currently, quotes for most midrange and low-end consumer-spec MLCCs show no tangible profit margin At the same time, suppliers are under pressure to present satisfactory year-end financial results Therefore, suppliers are less willing to cut prices than before Right now, their top priority is to survive through the latest market downturn Keeping prices stable will allow them to retain some profitability and thereby persevere through this challenging period for the industry
To Mitigate Effect of Demand Slump for Consumer Electronics, MLCC Suppliers Expand Production Capacity for Automotive Offerings
Looking ahead to 2023, the state of global economy is still expected to be anemic This, together with geopolitical tensions and China’s commitment to its zero-COVID policy, will likely delay the demand turnaround in the consumer electronics market However, the demand for electronic components from the automotive industry is expected to pick up steadily as the global semiconductor chip shortage gradually dissipates Hence, MLCC suppliers will be focusing on automotive offerings next year SEMCO will be aligned with Samsung Group’s grand strategy for 2023: all divisions including semiconductors, display panels, passive components, camera modules, etc will launch a full-scale effort to develop businesses in the global automotive market Regarding SEMCO’s capacity expansion plan for 2023, the supplier will add a total of 2 billion pieces per month of production capacity for automotive-spec MLCCs at South Korea’s Pusan and China’s Tianjin
Turning to Murata, the supplier has kept its production capacity for automotive MLCCs growing at an annual rate of 10% Starting in 2Q23, Murata will be adding a total of 3 billion pieces per month of production capacity at its three production plants Two of them are located in Japan’s Fukui Prefecture and Izumo, whereas the third one is located in the Philippines With this addition, Murata will reach 25 billion pieces per month for its entire production capacity, thus further cementing its position as the industry leader
Lastly, regarding Yageo, it has fully incorporated KEMET’s technologies for automotive MLCCs and will begin expanding its production plant in Taiwan’s Kaohsiung in 2Q23 This plant is expected to gain another 15 billion pieces per month of production capacity
For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms Latte Chung from the Sales Department at lattechung@trendforcecom
For additional insights from TrendForce analysts on the latest tech industry news, trends, and forecasts, please visit our blog at https://insidertrendforcecom/
2022/06/14
With the course of the COVID-19 pandemic constantly changing, China is sticking with its “Dynamic Zero-COVID Policy” and has been slow to lift the lockdown on its cities that have been recently affected by the outbreaks of the disease Hence, the manufacturing industries of the major Chinese cities are facing delays in the resumption of normal operation, and a production gap has emerged in 2Q22 For the electronics ODMs, this production gap will be difficult to bridge in 2H22 Additionally, the ongoing global inflation is keeping prices of goods at a very high level, and this trend will dampen the peak-season demand surge during the second half of the year The effect of the inflationary pressure has been especially noticeable in the demand for consumer electronics such as smartphones, notebook computers, and tablet computers This, in turn, is also impacting the MLCC market in terms of demand and inventory Currently, the general inventory level has risen above 90 days for MLCCs of all sizes Therefore, TrendForce forecasts that prices of consumer-spec MLCCs will fall further by 3-6% on average in 2H22
On the other hand, demand remains fairly strong in application segments such as high-performance computing solutions (which include servers), networking equipment, industrial automation solutions, and energy storage systems Furthermore, IDMs in the semiconductor industry will be adjusting the allocation of production capacity as the market for consumer electronics continues to experience a slowdown in 2H22 As a result, the undersupply situation for certain ICs will ease Moreover, demand will be propped up in the high-end segment of the MLCC market and other application segments (eg, automotive electronics and industrial equipment) All in all, thanks to the demand related to automotive electronics, servers, networking equipment, etc, TrendForce forecasts that the annual total MLCC shipments will increase by 2% YoY to around 258 trillion pieces for 2022
Shipments and Prices Have Fallen for Consumer-Spec MLCCs, While Quotes for Automotive- and Industrial-Spec MLCCs Have Held Steady
According to TrendForce’s research, prices of consumer-spec MLCCs registered drops of 5-10% on average during the period from 1Q21 to 1Q22 To further spur demand, MLCC suppliers have lowered prices further by 3-5% in 2Q22 In fact, the price has dropped to the level of material cost for some low-end consumer-spec MLCCs In the previous market cycles for MLCCs, the inflection point in the supply-demand dynamics tended to appear following continuous climb or fall in both prices and shipments For instance, prices and shipments were on an upward trajectory from 2H20 to 2021 And as of now, prices and shipments have been on a downward slide for two consecutive quarters Looking ahead, there will be no easing of the downward pressure, so quotes for consumer-spec MLCCs are projected to register declines of 3-6% during 2H22
With regard to industrial-spec MLCCs for niche applications, the overall demand for these products will pick up as buyers experience a loosening of supply for some semiconductor chips TrendForce currently projects that prices of industrial-spec MLCCs will either register more moderate declines of 1-2% during 2H22 or stay mostly flat for the period Turning to automotive-spec MLCCs, prices and shipments will hold steady because quote offerings and contract negotiations are conducted on an annual basis for this product category
MLCC Suppliers in Japan, South Korea, and Taiwan Expand Offerings so as to Limit Impacts Related to Demand Fluctuations in Consumer Electronics Market
Japanese MLCC suppliers Murata and TDK now control almost 80% market share for automotive MLCCs Besides raising production capacity for automotive offerings, these two suppliers are also strengthening service offerings for various related applications For instance, they are boosting engagement with their customers through collaborations on product design and advancing the development of service offerings to the modular level In the fields of automotive powertrain systems and ADAS, Murata and TDK have begun to provide solutions and services for image sensor modules, intelligent parking assist (IPA) modules, etc
South Korea’s Samsung has successfully completed the qualification process for its automotive offerings this year Moving into 3Q22, Samsung will gradually raise production capacity for automotive offerings at its plant in Tianjin As for Taiwan’s YAGEO, the new production lines at its base in Kaohsiung are expected to commence pilot production in 4Q22 Much of the additional production capacity that YAGEO will be taking on is for high-voltage MLCCs and large-sized 22u automotive MLCCs (eg, the 0805 and 1210 products) The new production lines will enter the mass production stage near the end of 1Q23 with the initial total production capacity reaching 8-10 billion pieces per month YAGEO is also diversifying its services and solutions in order to expand into high-end application segments such as military technologies, networking equipment, automotive electronics, medical devices, etc Examples besides MLCCs include resistors, inductors, and antenna modules
TrendForce’s latest investigation on the COVID-19 lockdowns in China finds that the manufacturing industries residing in the eastern part of the country are starting to recover Looking specifically at Shanghai, the transportation of goods out of its seaports and airports is gradually returning to normal Therefore, ODMs’ production sites that are located within the region will be able to again ramp up shipments of finished products Furthermore, the issue of component mismatch will ease significantly as the logistics system, on the whole, is returning to normal operation The improvement in logistics will thus inject growth momentum into shipments of finished products in 3Q22 On another hand, several major variables will be influencing the MLCC market during 2H22 These include geopolitical tensions, the maintenance of the zero-COVID policy by the Chinese government, and the potential of inflation turning to stagflation
For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms Latte Chung from the Sales Department at lattechung@trendforcecom
For additional insights from TrendForce analysts on the latest tech industry news, trends, and forecasts, please visit our blog at https://insidertrendforcecom/
2022/04/12
Due to the explosion of the COVID-19 pandemic in China, Shanghai has adopted a rolling lockdown policy since March and Kunshan City, a major production hub for the electronics industry near Shanghai, has also felt the impact According to TrendForce, limited manpower and logistics and suspended transportation options mean neighboring OEMs and ODMs can only rely on onsite inventory to barely meet the needs of production lines, further exacerbating component mismatches Concurrently, a short-term surge in finished product shipments and demand for material replenishment after the various lockdowns are lifted may gridlock customs authorities, with delivery delays potentially lasting until the end of April before there is any chance for improvement
TrendForce further indicates, starting from 4Q21, demand for consumer specification products, which account for the bulk of products sold by MLCC suppliers in Taiwan, Korea and China, weakened as customers continue to adjust their inventories Although ODMs currently predict the demand for consumer specification MLCC will recover month by month in 2Q22, emergency lockdowns caused by the pandemic are bound to impose delays on logistics Likewise, OEMs’ supply of key direct buy components will also be interrupted due to the Shanghai lockdown Shortages of CPU, battery module, and panel materials will impact production lines because materials cannot be delivered to relevant factory warehouses, exacerbating ODM component mismatch issues On the other hand, the focus of downstream branded customers remains on low visibility and weak demand in the 2Q22 end market
MCLL supplier production centers in China including those located in Tianjin, Suzhou, Wuxi, and Guangdong, have yet to be locked down but inter-provincial logistics and transportation have clearly felt the escalation of inspection and supervision since the end of March, resulting in prolonged transportation timetables However, the biggest problem for MLCC suppliers at this stage is they cannot deliver materials to Shanghai and Kunshan There are a number of large ODM plants at these two locations, such as Quanta Shanghai Manufacture City in the Songjiang District of Shanghai and the Compal, Wistron, and Pegatron campuses in Kunshan At present, ODMs’ average inventory level for consumer specification products sits at 3 to 4 weeks, which is sufficient to meet the needs of short-term production However, stocks of certain high-voltage automotive MLCC of 250V or higher specifications and high-end server MLCC size 0805/1206/1210 items may be in danger of depletion
Looking to 2Q22, the lockdowns of Shenzhen, Dongguan, and Shanghai that began in March have hobbled China's manufacturing industry and sent it into a period of contraction In addition, the Russian-Ukrainian war and rising inflation continue to slow demand growth for mainstream consumer electronics, potentially risking recession With so many unfavorable factors, ODMs must still observe an easing of component mismatching before further considering MLCC stocking momentum after restrictions are lifted If the pandemic in China cannot be effectively brought under control in the short term, overall ODM inventories will continue to be maintained at a high level for approximately 1 to 15 months to prevent similar sudden lockdowns disrupting operations However, TrendForce believes that it will be difficult for MLCC suppliers to surmise the visibility of customers' real demand Once the purchase order situation reverses, they will be unable to respond quickly with capacity adjustments, thus becoming a primary focus of MLCC manufacturers’ risk management in 2Q22
For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms Latte Chung from the Sales Department at lattechung@trendforcecom
For additional insights from TrendForce analysts on the latest tech industry news, trends, and forecasts, please visit our blog at https://insidertrendforcecom/
2022/04/12
According to TrendForce, the consumer electronics market will feel the brunt of the weakening stay-at-home economy, the pandemic in China, international tensions, and rising inflation in 1H22 Coupled with the traditional off-season, demand for relevant applications such as PCs, laptops, TVs, and smartphones has cooled significantly and downstream customers have successively downgraded their shipment targets for the year, while demand for automotive, Internet of Things, communications, and servers products remain good At the same time, the supply chain will build higher inventories in general to mitigate the risk of material shortages due to transportation impediments induced by the spread of the pandemic and the ongoing war between Russia and Ukraine
1 Foundries
Due to the prolonged lead-time of semiconductor equipment and limited new capacity in 1Q22, the overall foundry capacity utilization rate remains fully loaded, in particular, component mismatch issues continue for parts produced at mature nodes (1Xnm~180nm) Looking forward to the second quarter, although growth in global wafer production capacity remains limited, due to weak demand for end products, continuing international tension, and China's forced lockdowns and supervision due to the recent spread of the pandemic, there is an opportunity for the supply chain to obtain a more adequate supply of wafers that were previously squeezed by production capacity
2 Servers
The overall supply of key server materials improved slightly in 1Q22 In addition, due to increasing orders from ultra-large data centers, the general supply cycle of NetCom chips such as LAN IC/chip remains as long as approximately 40 weeks but the demand gap can be bridged by instituting urgent order fees, mitigating actual impact As the aforementioned situation eases, additional orders for ODM motherboard production are moving briskly, prompting continued stocking of FPGAs and PMICs materials NetCom chips are also overstocked and the overall market has a reached a "rich get richer" mindset Material shortages at second-tier ODMs still stifle the production of motherboards for a small number of customers but does not affect the overall server market supply With improvements in material supply, server shipments will increase significantly in 2Q22, growing an estimated 158% QoQ to 36 million units
3 Smartphones
Affected by sluggish seasonal demand, the Russian-Ukrainian war, and rising inflation, market demand has cooled Thus, material delivery issues in the supply chain have eased compared to 2H21 Although there is still a shortage of certain components, most of these shortages are concentrated in mid/low-end smartphone products The lead time for 4G and low-end 5G SoCs is approximately 30 to 40 weeks, which is limited by production capacity planning Since last year, the demand of the mid/low-end mobile phone market has not been met This is followed by A+G sensors with a lead time of approximately 32~36 weeks and OLED DDIC and Touch IC with a lead time of 20~22 weeks The production volume of smartphones in 2Q22 will be affected by the interaction of the aforementioned factors with a forecast production volume of 323 million units, or only 6% QoQ, which is lower than the performance of previous years
4 Notebooks
Also affected by weakening end market demand, discounting client SSDs that are no longer oversupplied, Type C IC, WiFi, and PMIC all currently boast long lead times, with Type C IC the lengthiest at 20~25 weeks However, compared with TrendForce’s assessment at the beginning of this year, the delivery cycle has not grown longer, so the lead time of these three types of products is expected to improve by the end of 2Q22 As supply chain backlog continues to improve, shipments of notebook computers (including Chromebooks) is expected to reach approximately 551 million units in 2Q22, down 07% QoQ
5 MLCC Passive Components
From the perspective of other key components, taking MLCC as an example, demand for major consumer electronic products such as mobile phones, laptops, tablets, and TVs declined significantly in 1Q22, resulting in high consumer product specification MLCC inventory levels held by original suppliers and channel agents and this situation may continue into 2Q22 At present, the stocking momentum for automotive and industrial MLCCs has steadily increased, while consumer specification products have yet to escape the pattern of oversupply In 2Q22, the MLCC market has the opportunity to alleviate its component mismatch issues through gradually increased production capacity and automotive and server ICs supplied by semiconductor IDM companies, driving stocking momentum at automotive power, server, fast charging, and charging/energy storage equipment OEMs Vehicle and industrial MLCCs have the opportunity to become primary growth drivers in 2Q22 with Murata, TDK, Taiyu and Yageo as the primary beneficiaries Consumer specification products, which account for the bulk of MLCC production from suppliers in Taiwan, South Korea, and China, may face continued market demand weakness in 2Q22 due to a slowdown in demand for mobile phones and laptops and continuing inventory adjustment by branded companies and ODMs
Looking forward to 2Q22, not including servers, demand for end products related to the consumer category remains weak Components that were originally oversupplied will face more severe price tests due to the imbalance between supply and demand In terms of materials in serious short supply, more output will be transferred to products with strong demand through the deployment of internal production capacity TrendForce believes that from the changes in PC market conditions, it can be seen in rapid changes in demand, purchasing behavior has quickly switched from the former over-ordering strategy to actively cutting orders, inducing supply chains to buck the seasonal trends of previous years Due to the accelerated recent spread of Omicron in China and under the country’s dynamic zero-COVID policy, mandatory and sudden lockdown and control measures may cause local manufacturers to face multiple and complex supply chain problems, which will be detrimental to market performance
For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms Latte Chung from the Sales Department at lattechung@trendforcecom
For additional insights from TrendForce analysts on the latest tech industry news, trends, and forecasts, please visit our blog at https://insidertrendforcecom/
2022/01/18
The allocation of Murata's primary production hubs and production capacity is as follows: 56% in Japan, 36% in China, 3% in Singapore, and 5% in the Philippines, according to TrendForce’s investigations Recently, a cluster of employees at Murata's Fukui Takefu Plant tested positive for the COVID-19 virus Since production diversion management had been strengthened and anti-pandemic measures implemented in advance, only some categories of production capacity have been reduced or suspended and this incident has not halted production for the entire factory According to TrendForce, the Fukui Takefu Plant accounts for 207% of the company's production capacity, mainly producing high-end consumer MLCCs The current production reduction or suspension of some items will affect the supply of products such as servers and high-end smartphones Fortunately, Fukui Takefu still retains 4~ 6 weeks of inventory and this incident should not tighten market supply in the short term
Decentralized production hubs and off-site backups are major issues for MLCC suppliers after the pandemic
In addition, according to data released by the National Health Commission of the People’s Republic of China on January 17, the cumulative number of COVID-19 cases as of January 16 reached 163, including 80 in Tianjin and 9 in Guangdong, distributed among the production center of suppliers such as SEMCO, TAIYO, WALSIN, FENGHUA, and VIIYONG The current situation will once again test the operation and risk management of MLCC suppliers as they disperse production hubs and back each other in terms of production capacity These plans have become an important 2-3 year strategy for MLCC suppliers
It is worth noting that the recent pandemic outbreak in Tianjin, China is intensifying Samsung, which is located in the Tianjin Economic-Technological Development Area, is currently operating normally However, as the Winter Olympics opening ceremony draws near, China has stepped up its zero-COVID policy In order to avoid a situation in which employees are unable to return to the factory due to a positive COVID test in the area where they reside, some production line employees have been temporarily living in the factory Korean executives are also living in the factory to enhance response times to rapidly developing circumstances In addition, the Philippines, one of the major production centers of MLCC in Southeast Asia, has also experienced a sharp increase in the number of confirmed COVID-19 cases since January this year Murata and Samsung, who currently have factories in the region, have not reported the impact of the local pandemic and TrendForce will continue to monitor these two industry players moving forward
For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms Latte Chung from the Sales Department at lattechung@trendforcecom
For additional insights from TrendForce analysts on the latest tech industry news, trends, and forecasts, please visit our blog at https://insidertrendforcecom/
