Taiwan makers to gain from Murata move to drop lower-end MLCC production

Taiwan makers of MLCCs will stand to benefit from Japan-based Murata Manufacturing’s move to drop the production of general-type MLCCs before the end of fiscal 2020 to allow more capacities for high-end automotive-use MLCCs.

Murata has decided that in line with its plan to stop producing MLCCs sized 0402, 0603, 0805 and 1206 in fiscal 2020, it will stop taking orders for such products on March 31, 2019, with March 31, 2020 as the last shipment date, according to industry sources. The company hopes customers can settle negotiations by September 28, 2018 for the supply of such products.

The sources said that the Murata move is good news to both the Japan firm and Taiwan makers. For Murata, it can quit competition with Taiwan players in the lower-end MLCCs needed for computers, notebooks and consumer electronics to dedicate more to high-end MLCCs with high gross margins. For Taiwan makers, they can move to fill up the market space left by Murata and secure stable profitability in the coming few years.

EMS to source more MLCCs from Taiwan suppliers

The Murata move is expected to inspire Taiwan EMS, ODM and OEM makers to place more orders with domestic MLCC makers. Taiwan’s EMS firms usually source 70% of MLCCs they need from Japan’s Murata, TDK, and Taiyo Yuden in addition to Samsung Electro Mechanics (SEMCO), with the remaining 30% from Taiwan suppliers, the sources said.

With the encouraging news, many Taiwan listed MLCC makers saw their share prices rally to new highs on April 16, with leading maker Yageo’s unit share price soaring past the level of NT$600 (US$20.43).

In response to the Murata move, Yageo said that the company will keep boosting the production capacity and market share for niche-type MLCCS, and will maintain its competitiveness in general type segment.

Industry sources said that whether domestic MLCC makers will again hike their quotes following Murata’s terminating production of conventional MLCCs will not be a major concern for downstream customers. Instead, the customers will be more concerned about whether they can secure sufficient supply, the sources commented, adding that top executives of first-tier EMS firms have had to pay personal visits to local MLCC makers to secure stable supply of the passive component.

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