AN INTRODUCTION TO LEVITATING LEAD TIMES

(Paumanok Publications, Inc. Cary NC USA) Tantalum capacitor lead times continued to stretch in March on a month-to-month basis as vendors and material suppliers tried to come up with a "perfect storm" of reasons for the sudden shortage of molded Ta205 chip capacitors. This MarketEYE installment suggests that the shortage of tantalum capacitors has led to exuberant buying of other passive components, especially MLCC, thick film chip resistors and surface mount inductors.

  1. An increase in defense and aerospace spending for tantalum capacitors set off an exuberant buying scenario in the private sector.

  2. A pre-planned price increase in manganese cathode tantalum capacitors fell at the same time as unit demand for aerospace increased, increasing consumption and turning buyer excitement into downright panic (see slide showing panic). This also affected MLCC, thick film chip resistors and chip inductors.

  3. Key suppliers of Ta205 powder and wire noted that there were no price increases or shortages of materials. HOWEVER –

  4. A fire at the Mibra Tantalum Mine in Brazil caused a stoppage of shipments of tantalite ore from the mine to their largest off take customer, Global Advanced Metals. Today, March 26, AMG, the parent company of Mibra, has noted that GAM has discontinued its existing contracts for tantalum from the mine under the auspices that the mine has failed to replace the broken gravitational separator in an acceptable period of time.

  5. The weakening of the dollar to the yen, a trend which should continue with higher interest rates going forward in FY 2018 in the United States, has created an increase in the cost structure of components (and verticals) that have their base of operation in the West (Server Computers and Automobiles and ironically Tantalum Capacitors).
     

CONCLUSION: The shortage of supply for tantalum capacitors is based largely on a panic buying situation brought about by specific events happening at the same time- a perfect storm of details- that included a shift in currency valuation; price increases for manganese cathode products; increase in defense spending for aerospace and a perceived supply chain disruption. The outlook will be for a pullback in demand, once all the shelves are stocked and the panic turns to exuberance to normal patterns, expect the market pendulum to swing the other way.

CAPACITOR LEAD TIMES

ALL CAPACITORS continued to display tight and rising lead times for March 2017 on a month-to-month basis with continued increases in lead times for all tantalum capacitors as well as some key ceramic capacitors. During March 20917 Paumanok conducted additional deep dive research to reveal to problems with capacitor grade tantalum powder or wire coming from the major merchant vendors. Therefore, Paumanok does believe that demand is coming from the computer markets because the weakness in the dollar to yen in FY 2017 and the even greater weakness expected in FY 2018 is making the market react as a shift has occurred in dollars- things are more expensive and this has ground the more narrow supply chains to a crawl. It’s fascinating. The reader can see that the market is spiking, with demand rapidly increasing and lead times getting stretched for the 2016 calendar year and into March 2017. Directionally it is still moving upward compared to previous years, the pressure is on.

Figure 1: Capacitor Lead Times in Weeks: Overall Trend by Month to March 2017

Source: Paumanok Publications, Inc.

TANTALUM CAPACITOR LEAD TIMES

Lead times continue to rise for tantalum capacitors, especially for large case size chips that have seen lead times stretch by 65% for some parts in February and spikes for all major parts again in March as customers panic and try to grab up as many parts as they can. The conclusion is that if you have a majority of component supply and the global currency favors the currency in which the products are manufactured or reported, the windfall can be profitable. The Japanese vendors of MLCC realized this from 2014 through to 2016. The major vendors of tantalum capacitors include KEMET Electronics, AVX Corporation, and Vishay Intertechnology.

Figure 2: Tantalum Capacitor Lead Times in Weeks: Overall Trend by Month to March 2017

CERAMIC CAPACITOR LEAD TIMES

Ceramic capacitor lead times increased from a seemingly seductive state since 2014 and suddenly saw an increase in demand for large case size MLCC (which is where we first noted the shortage in tantalum capacitors for FY 2017). The market increased in consumption for all case sizes as customers responded to what seems like a real shortage by grabbing enough parts to last for some time, and in doing so, are creating an environment where price is secondary to delivery. Major ceramic capacitor vendors include Murata, TDK, Taiyo Yuden, Kyocera/AVX, Walsin, Yageo and KEMET.

Figure 3: Ceramic Capacitor Lead Times in Weeks: Overall Trend by Month to March 2017

OVERALL RESISTOR LEAD-TIMES

After a strong increase in lead times for resistors in December 2016, the entire resistor market turned on, with spikes in demand across the board for various types of resistors consumed in digital electronics. The pressure was on in January for thick and thin film chips of all types and case sizes and there was also an increase in demand for resistor networks and power wirewound resistors. This trend continued into February where almost all major products in linear resistors, regardless of sub-category began to see extended lead times. In March we see that the pressure only remains on in thick film chips.
Our analysis of this suggests that demand for linear resistors for SMD applications, such as computer and auto, are reacting across the board to a shift in currency.

Figure 4: Linear Resistor Lead Times in Weeks: Overall Trend by Month to March 2017

THICK FILM CHIP RESISTORS

Thick film chip resistors showed a large scale increase in unit demand in October, November, December with another spike in January, February and again in March of 2017 which affected all case size from 0201 to 1206 and larger showing a significant increase in unit demand and extended lead times as a result. We believe that since a similar event happened in MLCC that this is related to demand computers and automobiles in large case size chips. Major vendors of thick film chip resistors include KOA Corp., Yageo Corp., Panasonic, Walsin, Vishay, Rohm and TA-I.

Figure 5: Thick Film Chip Resistor Lead Times in Weeks: Overall Trend by Month to March 2017

INDUCTOR LEAD TIMES BY TYPE

Discrete inductor demand has remained elevated for some time. In January, February and March 2017 the market for axial and radial leaded throughole inductors relaxed back down. There is a limited overall supply, intelligence, and technical data on inductors. Major inductor vendors include TDK, Murata, Sumida, TOKO, Taiyo Yuden and Vishay.

Figure 6: Discrete Inductor Lead Times in Weeks: Overall Trend by Month to March 2017

PASSIVE COMPONENT RAW MATERIAL INDEX

The global passive component raw material index experienced a price reduction in March on a month-to-month basis of 4.3%, which is important because we are seeing no reaction to the shortages of components in price of materials. 

Figure 7: Passive Component Raw Material Price Trend: 2012-2017

Dennis M. Zogbi


Dennis M. Zogbi

Dennis M. Zogbi is the author of more than 260 market research reports on the worldwide electronic components industry. Specializing in capacitors, resistors, inductors and circuit protection component markets, technologies and opportunities; electronic materials including tantalum, ceramics, aluminum, plastics; palladium, ruthenium, nickel, copper, barium, titanium, activated carbon, and conductive polymers. Zogbi produces off-the-shelf market research reports through his wholly owned company, Paumanok Publications, Inc, as well as single client consulting, on-site presentations, due diligence for mergers and acquisitions, and he is the majority owner of Passive Component Industry Magazine LLC.

View other posts from Dennis M. Zogbi. View other posts from Dennis M. Zogbi.
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