With the MLCC shortage still going strong, major manufacturers are adapting and responding in varied ways to the strained market conditions. Here's how some of these major players are faring as scarcity holds steady:
- Customer demand is still double what the company is shipping out, indicating that the ongoing supply constraints will continue into the mid-term.
- Yageo is pushing to raise its inventory levels to support 45 days’ worth of shipments, up from 35 days last quarter. This boosted level is still only 75% of a healthy, 60-day supply.
- Murata announced its plans to pull out of traditional MLCC markets and focus instead on high-end MLCCs for electric vehicles.
- As Taipei Times recently reported, the company “plans to stop taking orders for traditional MLCCs from March next year and stop production of such products by spring 2020.”
- In the company’s May 18 earnings call, KEMET CEO Per Loof shared his insights on the market situation. We’ve gathered some highlights below:
- “We're gearing up for a strong demand picture that we believe will extend well into 2019. Many believe that the supply situation – with lead times extending, in some cases, over a year – will actually get worse, meaning tighter, before it gets better.”
- “What we are experiencing is not a bubble, it's a trend.”
- “We believe there is now an annualized industry-wide shortage of 525 billion ceramic parts. KEMET Ceramics Group produced 44 billion pieces in fiscal 2018; therefore, the supply gap is equal to the capacity of approximately 12 KEMETs today. We're a small player in this industry; we're just 1% of the overall volume and 4% on a value basis. Yes, we are increasing our capacity over the next two years, but what our current plan calls for will only increase our output to 55 billion pieces or by 25%.”
- “By mid-2019, industry-wide capacity increases over by 10% will begin to come alive and will close some of the demand-supply gap, but the question remains as to how much the industry will grow and whether the projected increase in demand will create a new gap. Based upon known data, we do not see the overall new capacity expansion as disproportionate to growth.”
- “Because of the tightness of the market, we will need to be selective. We will continue to support customers who have supported us in the past.”
- In Vishay’s May 6 earnings call, president/CEO Dr. Gerald Paul stated:
- “At this point in time, we have no reason to believe that this request is [sic] high demand will come down. There are shortages for so many product, for product lines which we produce, if I cannot see at a point in time there will be of course a normalization of backlogs which at record levels. But this doesn’t mean that we will see a reduction into sales, because, at the moment, the backlog is simply high, and, of course, there will be some double ordering included, but this does not concern me.”
- The company has this message posted on their website: “Due to the global shortage of MLCC which has been kept from 2017, Samsung Electro-Mechanics is not afford to initiate or receive new sales orders for a while. Please contact one of our distributors to ask for a quote or for a new order.”
How long will the shortage last?
- The current shortage is primarily a result of technology explosions in three industries: automotive, smartphone, and IoT.
- Vehicles offer increasing electronic content, there are greater technological capabilities in flagship smartphones released on an annual basis, and “smart” products – from refrigerators to washers and dryers – are on the rise.
- While demand from the smartphone sector has softened in the second quarter of the year due to lower sales volumes, demand from the automotive and industrial sectors continues to be strong.
- As a result, commodities like diodes, transistors, MOSFETs, and many capacitors and resistors are expected to see supply constraints and extended lead times into 2019.
How can Smith help?
We have millions of MLCCs in stock now, ready to ship. If you're looking for a type that we don't already have on our shelves, our global team of supply chain experts is there to track down the parts you need. With nearly thirty-five years of experience navigating shortages, Smith's team knows how to source and deliver authentic, quality product on the timeline you need. If you need help closing gaps in your supply chain, reach out to your Smith representative today.
Vishay Q1 2018 earnings call - May 6, 2018: https://seekingalpha.com/article/4173107-vishay-intertechnologys-vsh-ceo-dr-gerald-paul-q1-2018-results-earnings-call-transcript
KEMET Q4 2018 earnings call - May 18, 2018: https://seekingalpha.com/article/4175225-kemet-corporation-kem-ceo-per-loof-q4-2018-results-earnings-call-transcript
(Minor punctuation changes made to transcribed quotes for ease of understanding.)
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