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MLCC shortages disrupting downstream production and shipments

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MLCC shortages disrupting downstream production and shipments

2.5.2018
Reading Time: 2 mins read
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Source: Digitimes news

Channel distributors of MLCCs are increasingly plagued by the growing supply shortfall of the passive component, as they can hardly find new supply sources to meet customer demand, resulting in production and shipment disruptions at downstream assemblers, especially second-tier ones, according to industry sources.

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Pegatron chairman TH Tung opined earlier that the shortage was not so serious and would not last long. He said the industry should not be carried away by concerns on the shortage of any particular passive component, given that an electronic product is made of numerous components.

Nevertheless, channel distributors said the MLCC supply shortage is absolutely not a short-term phenomenon, likely to last through the end of 2019 at least. They said the exponential growth in demand for MLCCs from the segments of automotive electronics, industrial control and AI (artificial intelligence) applications has never been seen before, which is the major factor behind the increasingly serious component shortages.

Distributors said that MLCC makers in Taiwan, Japan and South Korea all have difficulties delivering shipments smoothly, as their capacities can hardly meet the huge demand. To counter, distributors are forced to try all possible means to seek new supply sources.

Adjusting capacity allocations

Industry sources said MLCC makers are running at full capacities to meet clients’ demand, and they are also allocating part of the capacities for lucrative niche-type MLCCs – usually used in automotive electronics and industrial control devices – to turn out general-type MLCCs, which see much larger demand from makers of PCs and notebooks.

The sources said that Taiwan MLCC suppliers have expanded their capacities by 10-20% annually, but the new capacities are mainly dedicated to the production of niche MLCCs with high gross margins for automotive and industrial control applications. If the gross margins for commodity MLCCs can pick up gradually, leading makers including Yageo, Walsin Technology and Holy Stone Enterprise will still move to expand capacities for such components.

Many second-tier downstream assemblers have suffered a lot from failing to secure supply of MLCCs although they have readied cash for payment. To counter, Yageo has offered 20% of its MLCC supplies for open bidding among its customers, and Holy Stone has adjusted its capacity allocations, the sources indicated.

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