How MLCC discontinuations in 2018 may extend shortages in 2019

MLCC shortage in 2019 to continue

The rapidly-expanding IoT, mobile devices, and automotive industries all rely heavily on multi-layer ceramic chip capacitors (MLCC) to power existing products and help spur technological advances.

However, an ongoing global MLCC shortage impacted supply chains and production schedules for companies of various sizes in 2018. The issue intensified when multiple leading MLCC manufacturers made End-of-Life (EOL) announcements and discontinued several product lines, as recently as last year.

In many cases, production slowed or stopped due to a lack of correct MLCCs for printed circuit boards. Lead times for new orders were subsequently extended, orders became backlogged, and cost increases soon followed.

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Unfortunately, MLCC shortages in Q4 2018 also showed no signs of slowing.

As the demand for MLCCs continues to exceed supply, the shortage is expected to continue into 2019 and beyond. Here’s a look at how the MLCC shortage progressed and where things are headed in the future.

The Problem

Shortages in the MLCC supply chain have existed since the middle of 2017. The problem worsened last year as MLCC inventories fell below typical customer levels and manufacturers were forced to cut production accordingly.

Combined MLCC discontinuations by Murata and TDK from 2016-2018 are considered primary reasons for the MLCC shortage, per a MarketEYE report. These vendors, however, aren’t solely to blame.

Samsung, Taiyo Yuden, and Walsin also steered away from large case MLCC production or earmarked production for automotive applications in 2019. Product lines were discontinued for several reasons, including being unprofitable, deteriorating equipment for larger case MLCCs, and inconsistent raw materials supply.

Furthermore, trends toward electric and autonomous cars, 5G technology, and future aerospace endeavors are just some of the many rapidly evolving tech sectors which will continue to boost MLCC demand exponentially.

For example, the MLCC count in the iPhone 6s is 500 compared to 1,000 in the updated iPhone X (per device).

Overall, the continuing struggle to meet increasing MLCC demands in the wake of supply shortages remains a complex issue.

MLCC Discontinuation Timeline 2016 – 2017

MLCC supply disruption arguably began when TDK and Murata discontinued multiple MLCC product lines and sent out final shipments in a relatively close time frame from 2016-2017.

First, TDK reportedly announced it would discontinue 280 MLCC part numbers in October 2016. Part numbers and designated MLCC case sizes included the 0402, 0603, 1005, 1608, 2012, 3216 and the FK14K series. Then, final orders were taken by Dec. 31, 2016 and production ceased quickly by March 2017.

In November 2016, Murata announced its GRM 43 and GRM 55 MLCC series would be discontinued, including 1206 and 1210 case sizes. Cessation of both series was complete by May 31, 2017.

The GRM 55 stoppage affected multiple manufacturers. Producers of IoT products, security alarms, and cable set-top boxes, along with makers of industrial electronics products like power supplies, switchgear, and motor controllers are prime examples.

MLCC Discontinuation Continues in 2018

EOL announcements for MLCC didn’t stop in 2017. Less than a year after Murata quit making the GRM 43 and GRM 55 series, the company announced it would discontinue the GR/ZRA series, which reportedly included high capacitance MLCC at low voltage. Products ranging from 22 to 47 microfarads and 4 to 25 volts were included.

“The gap of supply and demand in the MLCC industry continues to expand and is expected to continue to do so,” Murata explained in a statement. “In order to provide as much continued support as possible to the market, Murata must adjust our production capacity away from Legacy products to those in market demand.”

Mobile phones, personal computers, tablets, video cameras, and auto navigation are among many affected products. Per the March 2018 announcement, final series orders are to be completed by March 31, 2019 and final shipments will be made in March 2020.

In April 2018, TDK also issued a new EOL announcement for 440 additional MLCC part numbers with a final order date set in the same month. Final ship date was October 2018.

Finally, Walsin discontinued the Y5V High Capacitance MLCC last October, with final ship dates set in November 2018. Many part numbers were included, such as 0402, 0603, 8085, 1206, 1210, 1812 case size MLCC in 10 Vdc, 16 Vdc and 50 Vdc; and also low profile Y5V products in the 50 Vdc at 100 microfarad (not easily replaceable) along with the 47 microfarad at 6.3 volts, the 2.2 microfarad at 50 volts, the 1.0 microfarad at 250 volts (all X7R).

Where is the Market Going?

In conclusion, trillions of MLCCs are produced each year, yet supply has consistently failed to meet high demand. Increasing MLCC count in new products and evolving technology is one contributing factor.

Furthermore, discontinuations from major manufacturers across various MLCC product lines in the past few years have created gaps which compound the problem.

Examples include parts in the 22 microfarad and 47 microfarad capacitances (large case sizes), discontinuation of high voltage MLCC (like the 250, 500, 630, 1000, and 2000-volt ranges), as well as product lines slated for automotive applications to 125 degrees C for under-the-hood applications.

Key shortages reportedly remain which are “largely being designated as based upon MLCC case size, voltage, and operating temperature.”

According to a detailed analysis of every product series, supply shortages can be traced back which impact a variety of applications including line voltage equipment, commercial aircraft engines, lighting ballasts, and many more.

Finally, because final orders for Murata’s GR/ZRA series are being taken in March 2019 and shipments will be completed by March 2020, extended MLCC lead times could also stretch into 2020.