Multi-layer ceramic capacitors (MLCCs) stand out as highly efficient, robust, and well-established products, driving rapid innovation across diverse industries and an expanding array of applications. Despite their maturity, the current global demand for these crucial components has reached unprecedented levels, leading to a widespread shortage in supply, particularly in traditional, non-specialized geometries. According to Inkwood Research, the global multi-layer ceramic capacitor market is set to progress with a CAGR of 6.82% during the forecast period, 2023 to 2032, reaching a revenue of $24,004.98 million by 2032.
The current shortage in multi-layer ceramic capacitors is attributed to robust and organic demand rather than factors like Chinese tariffs or regulatory changes. Interestingly, the market deviates from the typical economic trajectory observed in commoditized products.
In a conventional scenario, high-value manufacturers would exit the industry due to profit challenges arising from heightened competition, paving the way for lower-value mass producers to sustain mature product volumes with reduced overhead. However, the multi-layer ceramic capacitor (MLCC) market defies trends due to inherent technical challenges associated with high-capacitance-dense products that involve alternating layers of ceramic and metal.
Why are there shortages of MLCC?
Manufacturers have experienced a notable surge in demand for Multi-Layer Ceramic Capacitors (MLCCs) in smartphones, portable computing, and the automotive industry, surpassing their earlier projections.
In contrast to a typical car with an internal combustion engine, which utilizes approximately 2,000 Multi-Layer Ceramic Capacitors (MLCCs), the Tesla Model 5 boasts a significantly higher count, nearing 10,000. Similarly, the transition from the iPhone 6s to the iPhone X marked a substantial increase in MLCC count per handset, jumping from 500 to 1,000 units.
Capacity Constraints and Strategies for Overcoming Them
Although there is now a good supply, as manufacturers align with the needs of specific verticals, there is an outlook for decreasing supply. For instance, TTI has released a series of updates and has initiated adjustments in its supply chain strategy. These modifications aim to enhance, reduce, or eliminate product availability for the mass market or specific market segments, all in alignment with the evolving demand landscape. Both Future Electronics and TTI have provided data, effectively illustrating the existing strain on availability across various sizes and offering transparency into the challenges posed by current market conditions.
Whereas MLCC producers will keep concentrating on the most profitable vertical sectors. Companies will only be willing to spend where they can be sure of receiving a financial return because expanding manufacturing capacity entails significant capital expenditure.
Therefore, priority will be given to specific size formats and capacitance values that show to be most effective for thriving high-volume markets. Accordingly, it is advised that future product development plans and purchasing behavior be in line with the priorities of MLCC suppliers.
As the industry places increased importance on smaller format Multi-Layer Ceramic Capacitors (MLCCs), there is a potential for limited availability of larger sizes, including 0805, 1206, and 1825. In the long and medium term, it is advisable to consider redesigning your system to accommodate smaller, higher-density components, such as those in 0201 or 0402 sizes. This proactive approach not only future-proofs your system but also mitigates the risk of exposure to potential supply chain difficulties associated with the constrained availability of larger MLCCs.
Geographical Elements: MLCC Supply Chain
Asia holds a dominant position in the usage of Multi-Layer Ceramic Capacitors (MLCCs), with approximately 80% of the global supply being consumed in the region. Most of this supply is sourced from Asian MLCC manufacturers. While the supply and demand for MLCCs in North America and Europe are relatively balanced, these markets have lesser significance compared to their Asian counterparts.
MLCC producers are currently redirecting their inventory to ensure adequate stock for their Chinese clients’ manufacturing facilities. However, this redirection is expected to exert additional pressure on their Western customers as these markets are experiencing an uptick in demand. Even a minor increase in orders from Asian clients to Asian MLCC manufacturers can disproportionately accelerate shortages, impacting the supply chain for MLCCs to customers in Europe.
The multi-layer ceramic capacitor market is essential to the growth of modern electronics. The need for increasingly compact, effective, and high-performing electronic devices is growing, and with it, so does the significance of MLCCs. The market is ready for growth and innovation even in the face of ongoing obstacles, including supply chain interruptions and environmental concerns. These minor components will continue to power electronics in a variety of industries in the future with continued research and development.
MLCCs are used in applications including aerospace, medical, and automotive equipment where outstanding dependability is required.
Electrical charge is stored between two conductive plates that are separated by a dielectric substance in multilayer ceramic capacitors. Metal electrodes, such as silver or palladium, serve as the conducting plates in a multi-layer ceramic capacitor, while ceramic serves as the dielectric.