At the end of each year, I find it energizing to reflect on all the accomplishments of the prior year and to also think about how we will tackle new challenges in the year ahead. Looking back at 2022, I am first and foremost filled with gratitude and pride in our team. Since we remained focused on our commitments to our customers, despite significant market, geopolitical, and COVID-driven turbulence, 2022 was another exciting year of growth for Knowles Precision Devices. And, because we never lost sight of our core values during this time, we are also well prepared to take on new challenges and support the industries that need our specialty components the most in 2023 and beyond.
For years, Knowles Precision Devices has excelled at designing high-performance specialty capacitors and microwave components to help engineers solve some of the world’s toughest technical challenges. While we made advancements in a number of areas in 2022, there are three that standout to me.
First, we are pushing forward with a new production method for high-cap density multilayer ceramic capacitors (MLCCs). While our current production method is flexible and great for our wide range of high-performance components, it is not ideal for developing MLCCs that require tight layers for emerging applications that need extremely high cap-density. In the last few years, we have invested in new equipment and processes so that we can deliver tighter layers for higher cap density MLCCs, and we are on target to deliver a best-in-class product in this area soon.
The second area of innovation I am really excited about is our development of even higher performance ceramics. Since most of our components are developed using our proprietary ceramic substrates, about four years ago we determined that innovation and manufacturing performance had to begin with our ceramic materials. We made a strategic decision to invest in developing our ceramics R&D program, and as a result, we now have an outstanding team of ceramicists working in our world-class ceramics lab.
This highly skilled team is currently working to develop next-generation ceramic materials that will support higher temperatures, higher voltages, and higher Q and higher K components. In our lab, our scientists can create small lots of test parts before going to production and analyze ceramic materials at the molecular level. We believe that, if successful, the work we are performing in this lab would provide us with a competitive advantage across industries as we could quickly develop smaller RF filters with higher rejection for electronic warfare devices, ceramic capacitors with high Q for fast silicon carbide (SIC) switches, and high-temperature, high-voltage capacitors for next-generation electric vehicle (EV) charging applications.
The third innovation I want to highlight, and it is the trickiest one, is the work we are doing with a group of technology partners to develop a physically tunable filter within a selective band. This would be a significant development for RF filters since filters today are either digitally tuned, which is insufficiently selective for some applications, or switched filter banks are required, which are expensive and take up a lot of space. While this is more of a long-term goal, it is hard not to get excited thinking about all the space that can be freed up with a physically tunable filter when designing devices such as a radar or an electronic warfare array.
Beyond our investment in innovation, another reason 2022 was a successful year for us was that we remained agile and adaptable to big global challenges. As we navigated the third year of the COVID-19 pandemic, many countries developed policies that allowed them to safely ease virus-related restrictions, and we have seen a broader return to pre-pandemic business practices. For us, this means we now have the opportunity to resume more face-to-face engagements both internally among our development teams and externally with customers globally.
While we did return to many of our pre-pandemic business practices in roughly two-thirds of the world, since we have a large team and customer base in China, the country’s “Zero-COVID” policies and resulting restrictions continued to be something we had to navigate. While travel within China became somewhat easier, entering China was very difficult, so we had to find ways to tend to our growing MLCC business virtually. We are looking forward to resuming face-to-face visits in 2023.
A new set of global challenges also emerged this year due to additional geo-political tensions caused by the Russian invasion of the Ukraine. Many countries throughout Europe are now quickly ramping up their defense investments, which is driving demand for microwave components that, in many cases, are already in low supply because of the still recovering global supply chain. Since we are not a commodity component supplier, and many of the supply chain woes of the past couple years have not impacted our business nearly as much as others, we were well positioned to meet the increased demands for these components.
Heading into the new year, we are in an excellent position to meet the demands of key growing markets while continuing to navigate global challenges. One of the biggest growth areas we see for our high-performance components is related to the rapid expansion of vehicle electrification. We believe this market will grow quickly because demand for EVs will be two-fold – directly from consumers and, as a result of evolving emissions regulations worldwide, from commercial entities working on electrified public transit and light- and heavy-duty vehicles.
We also believe we will see more demand for high-performance capacitors for in-vehicle applications beyond the drivetrain, such as heating and cooling systems, as well as outside the vehicle as the need for more charging infrastructure rapidly grows, including innovations in wireless charging systems. With the advancements we made in material and manufacturing R&D this year and our continued investment in MLCC design innovation, we are ready to meet the needs of this rapidly evolving industry.
The other area where we foresee growth in 2023 is for a variety of aerospace and defense applications. In 2023, we are ready to support the investment the US and many NATO countries need to make to expand their radar and electronic warfare technologies. We are already seeing increased design activity from European customers and are well prepared to meet these demands with our custom design capabilities for both microwave devices and capacitors.
Beyond growing through expansion in these two key markets, we are also fostering growth by continuing to focus on our distribution channel and our engagement with key distributor partners. In 2022, we grew through our capacitor and RF channel partners and we broadened our catalog filter offerings. We also invested a lot of resources into educating our sales and distribution channels on our recently acquired Integrated Microwave Corporation (IMC) products. Since our team can now offer filtering and ancillary components from 0GHz to 60+GHz, we have seen a lot of new customer inquiries in this area.
Finally, it would not be possible to continue to grow and innovate at this pace if it weren’t for our highly skilled and dedicated employees. Since the availability of labor in the US continues to be a challenge, we made the conscious decision to further invest in our current employees and improve our already high retention rates. As COVID restrictions have eased, we’ve put plans in place to be even more purposeful about training, professional development, and our culture so that our employees can gain new skills and better understand our company’s mission. As a result, our employees are more engaged and excited about being part of a team where they know they have the potential to grow and make an impact, which makes me really look forward to another successful year.
Do you have tough RF or electrical challenges ahead of you in 2023? Contact us today to see how we can help.