MLCC Leader Murata Shuts Plant Due to COVID-19
Back in April we noted that Murata (6981.JP), the leading producer of MLCCs (Multi-Layer Ceramic Capacitors), a key component in 5G smartphones and electric vehicles, was ‘unofficially’ worried about distortions in the components markets caused by trade issues with Huawei (pvt) and the US, which were causing other Chinese smartphone brands to over-order components to try to capture Huawei customers. The concern from Murata was a warning that things could change quickly if demand were to slow. While that has not been the case thus far, Murata is facing another crisis that could push things in the other direction.
The company has indicated that a case of COVID-19 in a business office has spread, infecting 98 workers, causing the company’s main MLCC production line in Takebu, Japan has been shut down so all 7,000 employees and 3rd party workers can be tested. As Murata holds a ~40% share of the MLCC market, the effect of the factory shutdown could be significant. The shutdown was instituted on August 25 and will continue through August 31, at least thus far, which would reduce production across the industry by ~1%. While this is likely not enough to cause MLCC prices to rise further this year, it does add a bit of uncertainty to the market, which has seen demand increase and inventory levels drop during this year. The industry is not yet facing a shortage, but an extended shutdown at Murata could certainly push things in that direction, although we noted on 8/19/21 that MLCC producer Yageo (2327.TT) was expected to reduce MLCC prices by 10% to its Chinese customers in September. While we expect that decrease was to stimulate business from Chinese smartphone brands, the picture for MLCCs is getting harder to decipher, although Yageo is building additional MLCC capacity, which could be the root for the share grab.
The company has indicated that a case of COVID-19 in a business office has spread, infecting 98 workers, causing the company’s main MLCC production line in Takebu, Japan has been shut down so all 7,000 employees and 3rd party workers can be tested. As Murata holds a ~40% share of the MLCC market, the effect of the factory shutdown could be significant. The shutdown was instituted on August 25 and will continue through August 31, at least thus far, which would reduce production across the industry by ~1%. While this is likely not enough to cause MLCC prices to rise further this year, it does add a bit of uncertainty to the market, which has seen demand increase and inventory levels drop during this year. The industry is not yet facing a shortage, but an extended shutdown at Murata could certainly push things in that direction, although we noted on 8/19/21 that MLCC producer Yageo (2327.TT) was expected to reduce MLCC prices by 10% to its Chinese customers in September. While we expect that decrease was to stimulate business from Chinese smartphone brands, the picture for MLCCs is getting harder to decipher, although Yageo is building additional MLCC capacity, which could be the root for the share grab.
MLCC Distributor Inventory Levels - 3/2020 6/2021 - Source: Octopart.com
RSS Feed