It is reported that the global MLCC market size in 2018 was 10.5 billion USD, most of which is occupied by the top ten companies in the industry with less than 20 manufacturers of MLCCs in the world, and half of them are located in Chin, with few market share of less than 4 percent. The MLCC industry highly monopolized has developed almost morbidly in the past ten years, with high barriers, high demand, and low prices. Nowadays, the rapid development of 5G technology and new energy vehicles all require a lot of MLCC supply.
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MLCC is one of the main passive components in the electronic machine, created by the American company in the 1960s and later developed and industrialized by the Japanese company, with excellent features that conform to the development trend of electronic products, of high precision, large capacity, and low power consumption. So, it has become the world's most demanded electronic components, and it has benefited from the rapid development of the global electronics industry. The growth rate every year of MLCC is eye-catching, of 10%-15%, which is supposed to flourish and develop healthily the industry originally, but the reality is often not as expected.
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MLCC Prices Have Been Consistently Lowered
The price of MLCC showed a temporary rise from 2017 to 2018, but it continued to decline until the fourth quarter of last year due to the lack of optimism in the downstream of the industry. Take the 0201X104K-6.3V specification with the largest amount on the market as an example, from 5 yuan per thousand in 2012 to 3.7 yuan per thousand in 2013. Even if the price rise appeared in 2018, it is only 4.3 yuan per thousand, which is lower than the 2012 price level, causing corporate profits have been severely damaged.
Multiple factors have led to the continued downturn in MLCC prices, which should be traced back to the early development of MLCC. Japanese companies dominated the MLCC market early, including Murata, Taiyo Yuden, and TDK, and a considerable number of companies are discouraged due to the extremely high technical and capital barriers of MLCC. But Samsung Electric of South Korea adopted a strategy of massive production and low sale prices to quickly occupy market share. Within a few years, Samsung Electric became the second-largest MLCC company after Murata, where two leading companies occupy 50% of the global market. However, the extreme entry of Samsung Electric has plunged the global MLCC industry into a vicious price competition, and the price of MLCC has declined year by year.
The whole machine companies have forced the price reduction of electronic components, and most MLCC companies have to lower the product prices to stabilize the order volume, which seriously affected the earnings of MLCC companies. In the end, no external enterprise is willing to enter the industry, and internal companies in the industry try to reduce their production lines, thus, the so global production capacity of MLCC has been decreased.
Mobile Phones and Electric Vehicles Stimulate the Demand for MLCC
The downstream of the MLCC industry covers almost all areas of the electronics industry, such as consumer electronics, industry, communications, automotive and military industries. MLCC is one of the largest and fastest-growing components. The number of MLCCs is increased from 166 in 2G to 700 in 4G. It is estimated that by 5G, the MLCC usage will increase to 1,000, which has increased by 20-30%. Each laptop requires 1,000 PCs, and each iPhone 11 cell phone uses more than 1,000 MLCC.
Now that the market for high-end smartphones and new energy vehicles has seen a surge in demand for MLCC, it has been found that the MLCC supply chain is difficult to meet the surge in markets. Orders of MLCC companies have increased since the fourth quarter of 2019, and the capacity utilization rate has exceeded the load. Besides, the cost increase in materials and human resources has increased the production costs of enterprises due to the epidemic. Therefore, some companies have raised the price of MLCC, such as Samsung announced a price increase of 10%-15% on January 2 of this year, and domestic companies, Fenghua and Three-Circle Group also raised the price of MLCC by about 15% in early January in 2020.
Large Market Size and Considerable Development Space of MLCC in 2018, the global MLCC market size was approximately 10.5 billion USD, which is expected to exceed 12 billion USD by 2021, with a CAGR of 5%. As the largest electronics manufacturing country around the world, the market demand for MLCC in China is growing faster. The data shows that the MLCC market size in China reached about 7.4 billion USD in 2018, which is expected to reach about 9 billion USD in 2021, with a compound annual growth rate of 7%, higher than the global average.
Under the uncertainty of the international environment and the inherent requirements of a strong country in science and technology, the state proposed that the autonomous guarantee rate for core basic components and key basic materials will reach 40% by 2020, and 70% by 2025, which offers a favorable development environment for the domestic enterprises.
The construction of the new MLCC production line by Three-Circle Group has been started, which is expected to spend 3 years being finished, and reach 223 million USD of annual sales income. Fenghua invested 1.07 billion USD in high-end capacitor projects, setting the highest investment in a single project for MLCC companies in China mainland. It is scheduled to be completed and put into operation in June 2022, which mainly produces chip multilayer ceramic capacitors and is expected to achieve an output value of 714 million USD in 3 years.
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