An Update on the Passives Market
Jonathan Plummer the Managing Director, EMS Electronic Manufacturing Solutions, Ltd
You may remember us talking about the end of the road for Multilayer Chip Capacitor (MLCC) parts last year.
Murata was just one of the manufacturers to announce it would be making a number of its MLCC parts ‘Not Recommended for New Designs’, meaning they would eventually become end of line (EOL) ‘legacy’ products. As a result, supply shortages have been an ongoing issue for the electronics manufacturing industry.
However, Murata has since suspended its EOL policy for lower and higher capacitance values and case sizes — although it is expected the manufacturer will follow through with these plans at some point.
What does this mean for the passives market as a whole?
Commodity suppliers have been the most affected by the downmarket correction in 2019, and the outlook for consumption looks uncertain in 2020.
The market will be unsettled depending on the case sizes, capacitance, grades (application) and individual manufacturers. Many manufacturers have cut back production capacity due to labour shortages, which has had a direct impact on lead-times (some manufacturers are reporting lead-times of over 40 weeks!).
Inaccurate forecasts are currently driving the shortages out of Asia. Customers and distributors in China, in particular, have seen excess stock dry up over the past 18 months as the market entered shutdown mode.
The EMEA market has not yet seen the impact of these shortages. However, although larger case sizes are still available, current availabilities could give a false sense of security.
The trend for advanced smartphone models and other electronic consumer devices will continue to have a significant impact on MLCC consumption. 5G roll-out has so far been relatively slow, but this will accelerate in 2020 — and with it, the number of components required to power the devices will increase.
Although the automotive market has been experiencing a slowdown, the progress in electrification will also result in a rapid increase of MLCC consumption — with car makers requiring significantly more components to power their next-generation models.
Plus, as soon as the Chinese market wakes up again, this will have an immediate effect on worldwide availability. As such, starting to downsize wherever possible is a must to lessen the impact of potentially unbalanced supply and demand.
What does this mean for your project?
At EMS, we have seen a definite shift from larger to smaller case sizes. But unless you are producing mobile phones, you do not usually need the smaller case sizes in your designs.
Nevertheless, redesigning will be crucial going forward, as actions to stop producing some values or case sizes will lead to shortages until the market can adapt.
The maximum recommended size is 0402”, with 0201” likely to be ideal (safe) for products that could have a production lifecycle of a number of years. However, assuming you do not need larger sizes for voltage or current, we would recommend downsizing.
It is also worth noting that, despite component shortages, the limitation is certainly not the equipment. Although we are yet to see this requirement, our pick-and-place machines can place 01005” on both lines down to 03015” on the new second line.
If you have any questions about parts shortages, how they could affect your project and how we work to limit this impact, please don’t hesitate to get in touch.