Japanese Companies Abandoned the Focus of the Consumer Electronics Market and Turned to the Automoti

MLCC (multi layer ceramic capacitors) is the English abbreviation of chip multilayer ceramic capacitors. MLCC has been tepid for decades and has been available under orders. The industry transformation at the end of 2016 made the supply and demand of MLCC unbalanced.

Japanese manufacturers began to abandon some of the mid MLCC market in the end of 2016 and turn to high-end Chinese mainland. Many middle and high-end customers in mainland China began to turn Taiwan giants into MLCC giants. Taiwan Guoju then promoted the price rise tide of MLCC, driving Taiwan huaxinke and other passive component manufacturers to raise prices one after another.

In the past two years, the cumulative increase of MLCC price more than 20 times has seriously affected the electronic supply chain. Affected by the economic downturn and the Sino US trade war, MLCC began to reverse the market in the second half of 2018. MLCC agents shipped in large quantities, and MLCC prices fell rapidly, with individual price reductions of 40%.

MLCC is widely used in electronic products. Take the iPhone as an example. The more high-end smartphones, the greater the use of MLCC. An iPhone 7 phone uses 890 MLCC.

MLCC is used more in cars. The demand for MLCC for ordinary vehicles is about 3000 4000 pieces per vehicle, the number of MLCC for hybrid and plug-in hybrid vehicles is about 12000 pieces, and the number of MLCC for pure electric vehicles is about 18000 pieces.

From the perspective of market competition, leading enterprises are mainly Murata, Samsung Motors, Taiwan national giant, Taiwan Huaxin, Japan sun induction, Japan TDK, KYOCERA, and Chinese mainland Fenghua hi tech and Sanhuan group.

Japanese companies abandoned the consumer electronics market and shifted their focus to the automotive MLCC market

Due to the high technical content, large growth space and high profit margin of automotive MLCC, a few MLCC manufacturers such as Murata and TDK in Japan have abandoned the consumer markets such as smart phones and PCs and shifted their business focus to the automotive MLCC market since 2016.

In the automotive field, MLCC is usually used in power system, safety system, comfort system, entertainment system and so on. With the continuous development of automobile intelligence, networking and electrification, the consumption of MLCC in automobiles has doubled. In the era of intelligent and networked pure electric vehicles, the number of MLCC devices required by a single vehicle is about 6 times that of ordinary fuel vehicles.

In the automotive MLCC market, it can be subdivided into three categories: entertainment video and audio, navigation and communication, power and safety control.

In infotainment system applications, unless customers have special requirements, general MLCC can be used; Automotive power and safety systems, such as BMS, EPS, TPMS and ADAS, are closely related to the personal safety of passengers. Products with higher reliability level shall be selected, which shall at least meet the aec-q200 standard.

MLCC for vehicles has a wide range of main models. Products with sizes from 0402 to 2220 are in use, and the most widely used are 0603, 0805 and 1206. On the whole, although the vehicle market has no requirements on the size of MLCC, it has very high requirements on the reliability, service life and failure efficiency related to personal safety, and also puts forward high requirements on the temperature, humidity, climate and earthquake resistance of MLCC. To enter the automotive market, we must pass a series of automotive industry standards and quality system certification, and the threshold is very high.

Murata of Japan is the MLCC manufacturer with the highest market share in the world (accounting for about 40% of the automotive MLCC market). At present, the production capacity is about 960 billion pieces / year. In the past two years, the company has greatly reduced the low-end MLCC production capacity and stopped the supply of relevant products. Murata will stop supplying about 7000 kinds of standard MLCC in March 2019. At that time, it is estimated that there will be a supply shortage of about 30 billion MLCC per month. In 2018, Murata invested US $660 million to expand the production capacity of MLCC for medical and automobile, and it is expected to start mass production in 2019.

Due to the strong demand for automotive MLCC, Murata's sales in the last quarter increased by 30.6% compared with the same period last year. In an interview, Murata Hengfu, President and President of Murata production Institute, said that it is expected that supply and demand will continue to be tight in the next two years. Murata has been expanding MLCC capacity at a rate of 10% per year in recent years.

Samsung motor has surpassed Japan's TDK and ranked second in the world since 2009. In 2018, it plans to invest 100 billion pieces / year to increase the production capacity for automobiles and 5g products, and reach the production capacity in the second quarter of 2019.

TDK cancelled 700 million MLCC product orders in 2017, covering about 360 models, and gradually shifted its production capacity to medium and high-end products. According to the last quarter's financial report released by TDK, the demand for automotive MLCC is extremely strong, which makes TDK's revenue increase by 13.4% compared with the same period last year, and the consolidated revenue increase by 33.3%. TDK society feldspar Heicheng said that it is expanding production capacity at an annual rate of 20%.

Chinese mainland MLCC manufacturers have developed rapidly in recent years, but still mainly supply consumer electronics. Fenghua high tech has launched products that meet the aec-q200 standard, but due to its weak foundation, it is still difficult to pose a threat to Japanese and Korean enterprises.

Source: zoth Industrial Research

Japanese manufacturers are technology pioneers, constantly pursuing higher capacitance, smaller size and more dielectric. In order to expand its competitive advantage, Murata has successively bought the MLCC business units of Rohm and Panasonic, striving to make the same capacity value in smaller MLCC, so as to improve the order receiving advantage and gross profit margin.

The prices of high-end and automotive products are high and the increase is limited. At the same time, high-end and automotive products hardly go to the spot market. All transactions are supplied by contract, and the price cannot be hyped through the spot market. Therefore, the price of vehicle MLCC is not easy to be manipulated by market speculators.

The upstream raw material supply is still dominated by Japanese enterprises

The raw materials of MLCC upstream include two main categories, one is MLCC ceramic powder, the main manufacturers are in Japan, Korea and Taiwan, the other is internal and external electrode metal, and the main manufacturers are concentrated in Chinese mainland. The intermediate manufacturing process is mainly concentrated in Japan, South Korea and Taiwan.

Electronic ceramic powder is the main raw material for manufacturing ceramic components, and its core requirements are purity, particle size and shape. The manufacturing technology and process of high-purity, ultra-fine and high-performance ceramic powder is the bottleneck restricting the development of China's electronic ceramic industry. This technology is basically mastered in a few developed countries such as Japan and the United States. At present, the latest preparation technology of ceramic powder in the world is ultra-high temperature technology, and Japan occupies a global leading position in ultra-high temperature technology. The urgently needed powder of electronic ceramics in China mainly depends on import.

Taking MLCC ceramic powder material as an example, its production is highly concentrated in the world. More than 70% of MLCC ceramic powder materials in the world are monopolized by Japanese enterprises. Sakai is the world's largest manufacturer of electronic ceramic powder materials. Ferro of the United States and NCI of Japan rank second and third respectively. Other important manufacturers include fujiti of Japan, Kyodo of Japan, Toho of Japan, Chinese porcelain materials, etc.

Chinese ceramic materials are in a leading position in the production technology and market of ceramic powder, and have mastered the hydrothermal synthesis technology, nano dispersion technology and coating technology of ceramic powder. The main products include MLCC formula powder, microwave dielectric ceramic powder, nano composite zirconia, high-purity ultra-fine alumina, etc., accounting for about 10% of the global market and 80% of the domestic market. In addition, Fenghua high tech also has the production capacity of MLCC formula powder; Sanhuan group has the production capacity of additives. Torch electronics began to develop porcelain powder formula and ultra-fine manufacturing process. The continuous innovation of domestic enterprises is expected to change the situation that highly reliable MLCC and its raw materials rely heavily on imports.

Emerging car manufacturing enterprises are sad about the death of the supply chain

According to zoth's statistics, the planned capacity of China's new energy vehicle project reaches 17.13 million. From 2018, traditional car factories began to make large-scale layout of electric vehicle manufacturing. As the number of electric vehicles using MLCC is six times that of ordinary vehicles, this will inevitably aggravate the shortage of vehicle MLCC supply. There are hundreds of manufacturers that need automobile MLCC, while less than 10 can provide automobile MLCC, which has caused serious inequality.

Electric vehicle production capacity and planned total capacity of main engine plants in the Chinese market

Source: zoth industrial research data center

The supply of automotive MLCC will remain tight in the next 2-3 years, which will be a serious test for any vehicle enterprise preparing to expand the production capacity of electric vehicles, and even more difficult for emerging vehicle manufacturers. After all, leading MLCC enterprises will give priority to the orders of first-line vehicle manufacturers. If MLCC products from second-line suppliers have to be adopted, it is difficult to guarantee the quality, which will bring huge costs to later maintenance.

As a new mobile phone power, Luo Yonghao's hammer mobile phone was planted in the supply chain. As one of the most leading new automobile forces, Tesla has also encountered hellish supply chain problems.

With the rapid development of the new four modernizations, the requirements for practitioners are more focused. The production and supply chain advantages of traditional car enterprises are difficult to replace. The advantages of science and technology enterprises in automatic driving and car networking are also very difficult for traditional car enterprises to obtain. Cooperation can lead to win-win results.

Japanese Companies Abandoned the Focus of the Consumer Electronics Market and Turned to the Automoti 1

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