Murata Manufacturing Limited of Japan announced their plans to expand their existing production line for MLCC by “more than 30%” in units, which will further secure their number one market position in global manufacturing for ceramic chip capacitors.

A 30% to 35% increase in unit capacity in 2007 (calendar year) would bring their total production output to nearly 400 billion pieces (annualized). Murata noted that the company would add MLCC capacity in increments and not all capacity would come on line in the first quarter of the calendar year of 2007 (as many in the handset business expected).

The company also emphasized their capacity expansion would include all production lines and not just the competitive high-capacitance MLCC product sector. But Murata also noted that high-capacitance parts between 10 and 100 microfarad were going to be key areas, with emphasis upon 10, 22, 33, 47, 68 and the popular 100 microfarad parts as focused areas of expansion.

In terms of expanding the technology base, Murata noted they were producing the new 220 microfarads MLCC in sample quantities and fully expected to be able to produce a 330 and even 470 microfarad MLCC in the future. This technology development was in tune with their greater strategy of competing in the lucrative electrolytic capacitor markets with their electrostatic technology.

More Competition with Electrolytic Capacitors are Expected:

The company noted their strategy with respect to high capacitance MLCC has been to compete with tantalum electrolytic capacitors for applications in wireless handsets, computers, digital video cameras, automotive electronic subassemblies, and other product markets where tantalum capacitors are consumed.

The new phase of the strategy is to compete with the conductive polymer type tantalum capacitor line and the solid polymer aluminum capacitor lines respectively.

The polymer versions of electrolytic capacitors are known for their low equivalent series resistance at high capacitance in a very small case size; and are therefore sparingly used in many modern digital electronic designs.

These surface mount polymer and aluminum capacitors are now the target of BME MLCC manufacturers because the ceramic is inherently lower in ESR than a tantalum or aluminum with a polymer electrode. This is the intrinsic nature of the ceramic dielectric materials used in the production of MLCC.

However, to date, manufacturers of tantalum and aluminum electrolytic surface mount capacitors are investing heavily in capacity expansion in conductive polymer designs (Global capacity expansion for tantalum capacitors in calendar year 2007 should be between 10% and 15% as compared to 15% to 20% for MLCC). This is because conductive polymer designs in the lucrative areas between 101 and 1000 microfarad are still out of bounds of multilayered ceramic technology, so in any design where high capacitance is needed in a small case size, designers have no choice but to choose polymer tantalum or aluminum. But Murata wishes to change this through their increasingly more potent multilayer ceramic stacking capabilities.

Over the longer term, Murata’s goal is to capture the lucrative 220, 330 and 470 microfarads businesses using their multilayered ceramic capabilities. These markets have historically been satisfied by radial leaded aluminum electrolytic, vertical and horizontal chip aluminum electrolytic and molded surface mount tantalum designs.

Expanding Ultra-Small Case Size MLCC and Chip Array Markets:

Murata emphasized that in addition to their high capacitance MLCC expansion (which accounted for an estimated 67% of total capacitor revenues at Murata in 2006) the company is also focusing on expanding their ultra-small case size MLCC in the 0402, 0201 and the 01005 markets (which accounted for the remaining 33% of capacitor revenues).

These ultra small case size MLCC are the large volume components found in wireless handsets, portable MP3 players, DC/DC converters, power amplifier modules, digital video cameras, digital still cameras and various hand-held scanners and instrumentation and control devices (Murata noted they are already in mass production of the new 01005 case size MLCC which is best viewed with a microscope).

Of course the ultra-small case size MLCC business is inherently tied to the wireless handset business because of the expansion of handset functionality that is MLCC intensive, and the growth in annualized production of cellular phones.

These ultra-small case size MLCC have traditionally been palladium based, however, Murata noted they have been successful in introducing nickel electrodes into the 0402 case size MLCC. However for NPO designs, the markets remain stable and still palladium based. Murata noted that the NPO business for MLCC was stable and growing at a slow rate because RF circuit is a mature market already populated with MLCC. Demand was primarily in the X7R and X5R ceramic chip capacitor markets because these dielectrics were more suited for decoupling new features such as camera, GPS navigation, MP3, and Internet functionality.

Technology Expansion at Murata

Murata’s new expansion plans include growth in all of their captive ceramic dielectric material processing systems, with emphasis upon X5R and X7R; but also X8R and X8L for the growing specialty ceramic chip capacitor markets in automotive electronic subassemblies. Less emphasis is on NPO dielectrics because the high frequency growth in handsets is limited in comparison to the X5R and X7R filtering and decoupling requirements in handset features and computer microprocessor boards.

In the realm of increasing palladium consumption at the company, the company noted that this was true, but only by a small percentage. The company also noted that they experienced no increase in average price per pound for nickel electrode powder in 2006 regardless of the increase in overall nickel prices. The company continues to actively develop ceramic dielectric materials and new methods for depositing ultra thin dielectric layers which are necessary to produce the high capacitance MLCC product lines.

The company notes that they have also been successful with copper internal electrodes for use in their NPO ceramic capacitors, which they indicated is better than nickel at high frequencies because of the low impedance nature of the MLCC with copper. But nickel will remain their preferred internal electrode for many years to come.

Emerging Opportunities in Television Sets:

Murata notes that one of the next large growth areas for their MLCC product line will be in the television set markets in China, Taiwan, Korea, and Mexico; where the transition from the standard 32” CRT monitor television set, which contains approximately 250 MLCC per box; to a flat panel LCD or plasma display with an HDTV module will increase the content to 1,150 MLCC for the same size TV set.

The majority of demand for these sets will come from the United States as federal guidelines expect all households (100 million households) to upgrade to HDTV by 2009. TV set penetration by household in the United States is actually higher (at 98%) than telephones (at 92%) so the resulting churn in the TV set business will be substantial, as will the increase in demand for MLCC by traditional TV set manufacturers. In fact, it is estimated that TV set consumption of MLCC will quadruple by 2009.

New Opportunities in Automotive Electronics:

Murata also commented that they are actively developing a DC link capacitor solution for the hybrid electric power plant found in the Toyota Prius and the Honda Civic type HEV designs. The current solution is a DC capacitor bank that holds 10 polypropylene film capacitors, and which weighs about nine pounds. Murata notes that a smaller, more cost effective solution may be available through their multilayered ceramic technology.  Murata indicated that if size constraints are not limited, they could produce high capacitance MLCC greater than 1000 microfarad and greater than 750 Vdc, which are the required specifications for the DC link capacitor bank in the Prius and the Civic.

Overall Outlook in 2007:

Murata believes the overall market for ceramic capacitors will remain strong in calendar year 2007, and emphasizes that the increase in production in wireless handsets with added features, the movement to HDTV in North America, added demand from the computer markets and new opportunities in automotive electronics will grow unit demand for MLCC at the company in 2007 and justifies their unit expansion plans for the coming year.