Multi-layer ceramic capacitors (MLCC) are a highly efficient, robust, and mature product that are enabling rapid innovation across a myriad of industries and expanding numbers of applications. However, with global demand for these critical components at an all-time high, at the moment there is a global shortage in their supply – especially in the traditional, non-specialized geometries. As MLCC demand is fueled by significant product development in the IoT, consumer electronics, and electric vehicles (EV), new advancements in these industries have become limited to the capacitor’s availability during the shortage, with lead times reaching several months to a year in some cases.
While the shortage is due to healthy, organic demand (as opposed to Chinese tariffs or regulatory shifts), the market is not following the typical economics trend for commoditized products: high-value manufacturers exit the business due to profit struggles from increased competition, opening the door for lower-value mass producers to support the mature, developed product volumes through reduced overhead. The MLCC market, though, has not followed that trend, due to inherent technical challenges with the high capacitance-dense products that alternate layers of ceramic and metal. The manufacturing of these products requires a high degree of process development, which poses a barrier for lower-skill suppliers to enter.
The existing supply base can and is ramping up production capability to meet demand, but the lag in production capacity growth coupled with the relatively high barrier to entry has left end users and OEMs scrambling for inventory.
The media has further brought the capacitor (and other essential electronics component) shortage to light, due to the breadth of industries and geographic regions affected by it. TTI has published a flurry of updates this past summer, and has begun modifying its supply chain to increase, decrease, or eliminate availability to the mass market (or specific market segments) to best meet demand. Both Future Electronics and TTI have published data to clearly illustrate the current availability strain for various sizes. As of December 2018, the lead times (while still evolving) for many common sizes is approaching or exceeding 6 months. Generally, these capacitor lead times are trending toward even longer lead times, mostly across the board. The question then becomes: while Big Tech enjoys inventory priority, what can other tech companies do to mitigate 6-month lead times for MLCCs?
Mitigating Supply Shortages
Knowles Precision Devices is well-positioned to help our customers through this shortage. By specializing in high-voltage, high T/Q, low ESR products, we aren’t handicapped by Big Tech consuming the available supply of commodity components. Knowles has helped industry-leading customers mitigate a supply shortage. Below are a few examples.
A leading automotive OEM was ramping up their EV model in the market. The company urgently needed several hundred pieces of the 1812 and 2220 case size high-voltage parts for their BMS system. We reduced the customer’s lead time from 18 weeks to 4 weeks due to the flexibility of our unique manufacturing process.
A global leading telecom customer ran into a shortage of two 1808 case size high-voltage parts and came to Knowles for a shorter-lead alternative. We fulfilled the order in 4 weeks.
The MLCC market is booming due to IoT, consumer electronics, and electric vehicles industries that drive the demand and capacitance density sharply upward, crippling the market supply. Knowles Precision Devices continues to maximize its strengths, developing and manufacturing innovative, high-performing, specialty components to meet the dynamic MLCC market conditions. Our world-class expertise has helped our customers realize substantial lead-time reductions, better positioning them for success in the market.