Value-Added & Application-Specific Ceramic Capacitors: World Markets: 2005

High frequency ceramic capacitors for applications greater than 1Ghz accounted for approximately $110 million in worldwide sales value in 2005. High frequency ceramic capacitors are an important part of the $470 million value-added and application-specific portion of the $6 billion ceramic capacitor industry. This is where the operating margins are the highest for ceramic capacitor manufacturers and where quality, test and performance are more important than price. Other markets, that will be discussed in later editions of MarketEye, include the $340 million ceramic capacitor market for applications 500VDC and above into the hundreds of kilovolts and the $20 million USD high temperature specialty ceramic capacitor market for industrial applications 200°C and higher.

Frequency Ranges and Associated Value: 2005

There are multiple frequency ranges where ceramic capacitors are used, and these can be measured based upon traditional nomenclature. The frequency band from 3 Hertz to 300 Megahertz comprises the majority of all NPO ceramic capacitor purchases where frequency is a consideration, and these bands reach from ELF (Extremely Low Frequency) to VHF (Very High Frequency).

The focus of this MarketEye installment is the specialty markets in UHF (Ultra-High Frequency), SHF (Super High Frequency) and EHF (Extremely High Frequency), which cover the frequency spectrum at its apex - from 1Ghz to 300Ghz. This is where the price of a single chip, axial strap, radial box or pressed pill single layer ceramic capacitor can cost from $0.30 to upwards of $125 USD per unit depending upon the frequency range, and whether the product also requires high voltage performance, high temperature performance and overall high reliability performance with respect to thermal shock, vibration frequency and/or corrosion resistance. Thus, when raw material costs such as titanates and metallization, production equipment, personnel, test, etc., are taken into consideration, it becomes apparent that operating margins for ceramic capacitors in the UHF to EHF range are extremely attractive.

Product Markets for High Q Ceramic Capacitors >1Ghz

The majority of product applications in the UHF to EHF range fall within 1 to 3Ghz, which account for the majority of unit and overall dollar sales. Defense communication technology has given way to advanced forms of commercial wireless communication opportunities within the ultra high frequency range (1-3Ghz). Within the UHF spectrum there is a myriad of defense applications involving telecommunications, data communications and video communications frequencies for aircraft transponders and navigation, satellite communications, radar links, and GPS. Additionally, this is where commercial frequencies for advanced wireless phones, wireless networks, wireless CATV and commercial GPS have made substantial inroads, boosting demand for high Q ceramic capacitors. Within the UHF spectrum that a variety of medical imaging devices operate as does certain semiconductor sputtering machines, each of which constitute market opportunities for ceramic capacitor manufacturers supplying parts in the 1 to 3GHz range.

In the EHF range from 4Ghz to 300Ghz we note that almost all applications are defense related with respect to communications, radar and missile links; however, in this EHF range that wave division multiplexing for fiber optic communication links operates, and WDM is a buzzword for communications of the future.

High Q Ceramic Capacitor Consumption by Type and Current Market Demand: 2005

Regardless of the configuration, about 75% of the shipment value of high frequency ceramic capacitors are magnesium titanate based porcelain ceramics. There is small demand in this sector for both X7R and Z5U dielectrics where higher capacitance values are required in higher frequency environments.

In 2005 approximately 65% of all revenues for ceramic capacitors sold into the UHF through EHF spectrum went for high frequency wireless base stations, primarily for campus environments 2 miles in diameter. Other booming markets in 2005 were in defense communications in the UHF, SHF and EHF frequency ranges and for magnetic resonant imaging and related medical imaging technology.

Competitive Environment and Future Outlook

There are approximately 15 global vendors of high frequency ceramic capacitors in the world that compete in the UHF spectrum, 10 vendors competing in the SHF spectrum and only 6 vendors competing in the EHF spectrum. Those companies with the broadest product lines competing in ceramic capacitors greater than 1Ghz include AVX Corporation, American Technical Ceramics, Murata Manufacturing and Temex in France. Other noted vendors include Dielectric Labs and Syfer Technology (both Dover Corp. subsidiaries), Johanson Dielectrics, Inc., TPL Microelectronics, Presidio, Taiyo Yuden and American Monolythic Ceramics, among others.

Growth in the high frequency ceramic capacitor markets greater than 1Ghz over the next five years is highly probable as continued defense and homeland security funding drive demand for capacitors in the UHF spectrum and the SHF spectrum. In the commercial markets, continued, rapid growth is expected for high frequency wireless base stations operating in the UHF range. It is also expected that increased demand for WDM applications as telecom infrastructure companies will begin to expand fiber optic cable to the desktop and the home.

Note: For further information on High Frequency Ceramic Capacitor Markets see the Paumanok Market Research Report titled, “Value-Added & Application Specific Ceramic Capacitor Markets: 2005-2010”. This report and other are available in the MarketEye Research Center.