5G Driving Increased Demand for MLCC
Multi-layer ceramic capacitor (MLCC) suppliers are gearing up for a record 2020, thanks to the wave of 5G technology set to head into production, including the upcoming iPhone 12. China is leading the way with orders for components needed to produce 5G devices early this year.
Japanese firm Tiyo Yuden, one of Apple's suppliers, is expecting to benefit from the demand as 5G smartphones use roughly 30% more capacitors than 4G devices. The MLCCs manufactured by the firm are the building blocks of the modern world. The tiny components are made of metallic plates and are used in electronic circuits to stabilise voltage and power flow.
“We’re already getting orders for 5G base stations,” commented Shoichi Tosaka, Tiyo Yuden CEO, in an interview last month. “Early next year we should start seeing 5G-related orders for smartphones.”
Tosaka added that Huawei and ZTE have already paved the way with orders for capacitors used in base stations. Chinese carriers account for a large part of the demand, as the US government pushed US allies to exclude Chinese suppliers from their networks. According to Tosaka, Huawei could sell 100 million 5G enabled smartphones in 2020 alone.
2019 should have been a bad year for Taiyo Yuden, as smartphone shipments have been feeble, and the US blacklisted one of its largest customers in Huawei. Instead, the business stuck to its May forecast for the record revenue and profit, with demand for its capacitors proving resilient to geopolitical turbulence, mainly because they are components used in large quantities across various kinds of electronic devices, ranging from smartphones to electric cars. Consequently, Taiyo Yuden’s shares more than doubled in 2019.
When the first wave of 5G enabled phones arrives, it will open up the floodgates on device upgrades, according to projections by financial services firm Wedbush Securities Inc. It is believed that approximately 350 million iPhones among Apple’s 900 million installed user base are now eligible for an upgrade opportunity.
Tosaka predicts that the demand for MLCCs will continue to grow over the next five years to a decade.
Although investors still see Taiyo Yuden as a smartphone-oriented firm, the last 3 years has seen the business succeed in becoming less reliant on smartphone components. Previously, the company’s orders used to peak around July and August, influenced by preparations for an Autumn smartphone refresh, followed by a trough. Currently, automotive and industrial applications account for about 40% of Taiyo Yuden’s revenue, and Tosaka plans to increase this figure to 50% within 5 years.