Industrial, medical, and military demand for high quality, high-voltage multi-layer ceramic capacitors (MLCCs) has been hit hard by a shift in production by the world’s largest MLCC manufacturers who are focusing on a seemingly insatiable demand for smaller, lower voltage – and in some way – lower performance MLCCs. This demand has been fueled by the global growth of 5G networks and continued advancements in smart phones and mobile devices who are consuming significantly more MLCCs per device.
As the principal manufacturers pivot away from the larger high voltage, high Q (High Quality) MLCCs used by industry and the military, OEMs are experiencing significant delays in MLCCs of up to six months. The extent of the supply shortage jeopardizes product release schedules, industrial market share, and potentially even military readiness.
“It is a pretty massive carrot that is hanging in front of the major MLCC manufacturers,” said Scott Horton, vice president at Johanson Technology, a 40-year provider of high voltage ceramic multi-layer capacitors based in Camarillo, California. “When you consider that a high-end smart phone today can require substantially more MLCCs in a single device as compared to a similar phone only a few years ago, the current demand for smaller, lower power MLCCs is like nothing the market has seen before.”
As a result of a slowdown in consumer demand for capacitors in 2019, many OEMs and distributors were left holding surplus inventory. As a result, these same OEMs and distributors were hesitant to order additional inventory in 2020. Now, as the market ramps up, so does the demand for MLCCs despite very low capacitor inventory. This further exacerbates the shortage of larger high voltage, high Q MLCCs, since some manufacturers have focused production on smaller/lower voltage MLCCs during this time.
Now both ends of the market are scrambling to re-stock including the large electronics distributors. It is also largely Asian MLCC manufacturing supporting telecom and mobile device operations which are also based in Asia making fulfillment of industrial MLCC supply needs in Western markets even more acute.
“There is a ripple effect to the industrial and military market sector that is not really fully understood,” said Horton. “Although a shortage of electronic products used to manufacture consumer products like smartphones and automobiles would be national news, the lack of supply of larger, higher voltage MLCCs for industrial and military applications are typically under-reported. However, it will continue to squeeze business customers and eventually end users until it is resolved.”