MLCC supply is beginning to tighten

TTI’s vice president of product and supplier marketing, Jeff Ray

As lead times grow, expect the MLCC market to tighten throughout 2021. By TTI’s vice president of product and supplier marketing, Jeff Ray.

After a prolonged lull during 2019 and most of 2020, the supply of MLCCs is beginning to tighten. Lead times are extending across many case sizes and suppliers, both in commercial and automotive-grade components.

Factors causing this tightening include: increased demand from the communications and transportation sectors; depleted global inventories; and supply chain challenges due to increasing manufacturing facility absenteeism and increased transit times. Expect the MLCC market to intensify consistently throughout 2021.

Increased demand from the communications and transportation sectors can generally be attributed to advancements in 5G infrastructure and cellular handsets in Asia, and to a lesser degree the global automotive market’s move toward the electrification of drive trains along with more robust safety and infotainment applications.

The communications sector is a large consumer of small case size MLCCs (≤ 0402) in both commercial and automotive grades.

For the most part, the remaining factors can be attributed to supply chain issues in 2020. This has been a year of adjustment in the global supply of MLCCs, with customers, distributors and manufacturers correcting their inventory levels, maybe even overcorrecting in some cases. The lower-than-market demand for MLCC inventory has left some customers’ supply chains exposed to the recent uptick in the communications and transportation markets.

This combination of increased demand and recent developments of increased absenteeism at factories have placed a strain on MLCC supply chains. As distributors and customers shift into catch-up mode, the increase in demand will foster further MLCC lead-time extensions.

Capacity limitations may seem unlikely in light of well-documented MLCC manufacturing capacity increases in 2019. While it’s true most MLCC suppliers increased capacity through factory expansion and additional manufacturing equipment, an unfortunate result of the soft 2019 and 1H 2020 MLCC market is that many manufacturers reduced their workforces. Re-staffing trained MLCC production operators and inspectors has remained a challenge.

Here is what we see developing in the market right now:

Current market conditions see small case size (≤ 0402) low-CV commercial grade MLCCs being available, with few exceptions by type or manufacturer.

Small case (0201 and 0402) low-CV and high-CV automotive grade MLCCs are less stable: lead times are extending by eight to 10-weeks into the 24-week range.

Large case (≥ 0603) high-CV automotive grade MLCC lead times have remained extended throughout 2020 and are currently in the 20 to 24-week range.

Large case (≥ 0603) low-CV commercial grade MLCC lead times are also extended, typically in the 17 to 22-week range. Note that lead-times for 1206-2220 case size components (which are on the upper end of the large-case MLCC portfolio) have remained extended throughout 2020 as less additive capacity has come online to address this market demand. Lead times remain in the 20 to 24-week range for both low-CV and high-CV commercial and automotive grade components.

As we move from a difficult 2020 into a new period of market uncertainty, the importance of having a distribution partner becomes even more apparent. As the market leader in MLCC distribution, we’re committed to communicating today’s evolving market conditions to help you make the best supply chain decisions.