Posted on 04 Oct, 2018 by Daniella Baldock

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Welcome to our latest electronic component market review.

Unfortunately, we still don't see an end in sight and some lead-times are being quoted with 2019 and even 2020 delivery dates!

If you are working with an Electronics Manufacturing Services (EMS) provider it remains vital that you communicate and share forecast information with them. In addition, some of the advice we are receiving back from franchised distribution suggests Original Equipment Manufacturers (OEMs) may want to start looking at the option of fitting, or designing in, smaller components to their printed circuit board assemblies (PCBAs).

Clearly this isn't going to be a quick fix and there are cost, time and manufacturing challenges associated, however, as the design authority, this may be a direction OEMs now need to take to help 'future proof' their products. We wrote a blog post last month (you can read it here) aimed at design and manufacturing engineers around this topic which you might find of interest.  

Read on for an in-depth review of the electronic component marketplace as of October 2018.

Current market conditions

  • The MLCC market is still constrained with many manufacturers putting product on allocation and extending lead-times. As an example, Panasonic are quoting 99 weeks on out of stock chip capacitors and Kemet in excess of 52 weeks
  • From 23rd August 2018 the US imposed yet another tariff on Chinese imports, this time, an additional 25% on $16 billion worth of goods imported into the USA.
  • Murata have issued Product Change Notifications (PCNs) for a large proportion of legacy MLCC’s, with last time buys from March 2019 onward. 
  • Case sizes 0603, 0805 and 1206 are frequently now being referred to as 'legacy'. 
  • Chip capacitor manufacturers are finding it hard to invest in what they deem to be legacy technology as they continue to struggle to keep up with demand and pressure from Electric Vehicle, Smart Phone and Wireless technologies which all utilise much smaller case sizes and newer technology. 
  • Shortages of electronic components are still being quoted as extending well into 2019, and likely even 2020.
  • The memory market appears to be slowly stabilising, with recovery expected. However, DRAM pricing is still forecast to increase.
  • 50% (1.5trillion) of the global MLCC consumption can be attributed to Smart Phone technology.

Key capacity and lead-time issues

  • Maxim are observing stable lead-times for most product and quoting 8-10 weeks.
  • Infineon have lead-time and capacity issues on small signal diodes, power mosfets and rectifiers.
  • Nexperia are still struggling with allocation on some product lines, most notably diodes and mosfets, in cases sizes SOD323, SOT223, SOT23 and SOT232
  • On Semiconductor are battling to reduce lead-times due to capacity constraints on some small signal and rectifier products.
  • ST Micro power mosfet lead-times have reached 46 weeks plus.
  • Rohm are still battling with allocation issues therefore extended lead-times continue.
  • Xilinx silicon is currently on a 10 week lead-time.
  • Murata acquired new land to expand their MLCC production in April 2017. Construction starts  October 2018 and they expect capacity to be online by the end of 2019. This investment comes to a total of 40 billion JPY
  • To help overcome MLCC capacity issues, the advice from some manufacturers and franchised distribution is to consider different technology, relaxing tolerances, widening specifications and only using AECQ200 qualified product when absolutely critical to the application and market sector.

Pricing uncertainty

  • It is expected that Murata will increase pricing in Q4 2018.
  • Yageo, TDK, AVX and Kemet have all issued price increases in recent months. Some of these increases are affecting new orders as well as back orders already in place with distributors.
  • MLCC pricing is still only valid for stock quoted that day and is subject to change. Instability of MLCC pricing is not easing and is still fluctuating. Parts that used to cost a fraction of a penny are now being quoted anywhere between 2p and 70p!

Manufacturer mergers

  • It has been reported that On Semiconductor sold their acquired TVS Fairchild portfolio to Taiwan Semiconductor for $7.1 million.

PCB Technology

  • Kingboard added between 5% and 10% cost to their portfolio in July 2018.
  • The average wage in China has increased by 3% which could result in further increases in PCB production costs. 
  • Chinese New Year falls on 5th February 2019. Forecasting and securing orders as early as possible in the build up to this event will help ensure continuity of supply during this period of celebrations for the year of the Pig.
  • Copper pricing is still stable although we did see a brief hike earlier this month, which has now started to fall.
  • The electronic market has generated 2.8% of global growth in the PCB market during 2018; a majority of this growth has been observed from China.
  • High Density Interconnect (HDI) technology is growing rapidly during the demand for smaller PCB’s, utilising smaller components, that must be lighter and scaled down from typical PCB technology.


Supply Chain Excellence

 

Topics: Supply Chain, EMS, Outsourcing

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Daniella Baldock