Objectively, the japanese economy didn't have a great growth in the past decades, but when it comes to advanced high-tech fields, such as automobiles, robotics, industrial technology, equipment, materials, optics etc, Japan got a huge success.
In this article, we focus on the competition pattern of the global passive component supply chain, as well as what advantages Japan has in this field, then get some conclusions like what other countries (companies) could learn from it.
Passive components and market overview
The semiconductor industry does not contain passive components. However, a circuit semiconductor device requires the coordination of passive components to make it wrok well, so they are collectively called Electronic Components.
Passive components, also known as passive devices, are indispensable in all kinds of electronic products and should not be ignored. The principe part is the RCI, means Resistor, Capacitor and Inductor. Chip, miniaturization, micromation, and environmental friendliness are the development trends of passive components.
A resistor is used to regulate and stabilize current and voltage in a circuit.
Resistors account for about 10% of passive components market, and the global market for chip resistors is estimated to be $1.55 billion in 2019.
Inductor, also called a coil, choke, or reactor, is a passive two-terminal electrical component that stores energy in a magnetic field when electric current flows through it.
A capacitor is a device that stores electrical energy in an electric field. It is a passive electronic component with two terminals.
Capacitors account for about 70% of the total passive components market, and the global capacitance market is estimated to be about $21 billion in 2019. Among them, ceramic capacitors accounted for about 54%, aluminum electrolytic capacitors accounted for about 23%, tantalum electrolytic capacitors accounted for about 10%, film capacitors accounted for about 10%. For ceramic capacitors, the vast majority are MLCC (Multi Layer Ceramic Capacitors), the global MLCC market is about $15.8 billion in 2019.
Passive components ompetition pattern
The brand centralization of passive components is a major feature. For example MLCC, which is often lack of stock & price increases fastest, the top 6 manufacturers Murata, Samsung Electro-Mechanics, Yageo, Taiyo Yuden, AVX (Kyocera) and TDK account for about 70% of the global market share. Among them, Murata and Samsung occupy the largest shares, and Murata leads the global MLCC market with 100 billion MLCC production capacity / month, and Yageo, STaiyo Yuden and Huaxin Technology have about 30 - 45 billion pcs production capacity /month.
The passive components market is dominated by Japan, while the United States, South Korea, Taiwan and China have their own advantages. In 2019, the revenue of Murata, TDK and Taiyo Yuden on passive components was $6.7 billion, $4.6 billion and $1.8 billion, ranked 1st, 2nd and 4th of the market, with a combined market share of more than 50%.
In the field of major MLCC products, Murata accounted for 31%, Taiyo Yuden 13%, TDK3% (acquisition EPCOS), with Kyocera (holding AVX) and Maruwa, Japanese companies totally accounted for about 50% market shares. Other brands' market share: Samsung Semco 19%, Kemet USA 2%, Yageo 13%. More brands: Walsin, HEC, PDC, China mainland manufacturers: EYANG, FENGHUA, CCTC etc.
In general, Japan and Korea occupy sophisticated high-end brands. Especially around 2016, Japanese and Korean MLCC manufacturers upgraded their product structure and shifted their production capacity to high-capacity and high-standard products for automobile and industrial miniaturization as well as RF components, as a result there becomes a lack of provision of medium & low-end components.
Upstream of the passive components supply chain
Ceramic capacitor raw materials generally include dielectric ceramic powder, electrode materials etc. Ceramic powder suppliers include Sakai, NCI, Fuji, titanium, Kyoritsu (KCM), Toho, Ferro (formula powder and additives), Samsung, todakogyo, PSA(China taiwan) and Sinocera (China mainland).
For electrode materials in recent years, replacing palladium with nickel, copper and other Base metals, silver and other precious metals in order to reduce costs, BME (Base Metal Electrode) technology internal Electrode materials for nickel, external Electrode materials for copper, due to the high performance cost ratio it spread quickly. The world's main manufacturers are Japanese Shoei, Sumitomo; American Ferro, ESL (electronic science laboratory), Chinese xi'an hongxing, kunming institute of precious metals, Fenghua, sinocera etc.
Today japanese materials & passive components industry can be successful due to its lean culture. At the same time the Japanese government, according to the different periods of development and the international environment, gave a lot of preferential policy in some aspects like loans, taxes, exports and technology. Proactive industrial policy, trade incentive policy, as well as a relaxed environment for enterprise mergers acquisitions. In additional, at that time a relatively favorable international environment etc. Let's have a look at some representative Japanese manufacturers.
Let's start with Murata, the leader of passive components. Murata was founded in 1935, is the global leader of passive devices through its innovation, with over 30% share of MLCC and 40% of high-capacity inductors, Murata is the world's largest manufacturer of MLCC and inductors. Its main products include ceramic capacitors and communication modules. In its fiscal 2019 the revenue is $14.3 billion, which passive components accounted for approximately $6.74 billion. The keys to its success are:
Continously innovation, with new products and new markets prioritized; Control the source & core steps of upstream materials, technology, production process and innovative design. Improve its strategic layout through mergers and acquisitions and cooperative development: successively acquired the MLCC department of Rohm and Panasonic. In recent years, acquired Finland VTI etc, focus on automotive electronics, IOT, WIT120 healthcare in the future, and launch a variety of automotive sensor, IOT sensor and wireless communication module products.
Automotive electronics has higher safety requirements, forcing passive components to high-end, refined development, high-performance passive components gradually replace low-end passive components.
Next we study Kyocera, the king of electronic ceramics. Founded in 1959, based on precision ceramic technology, Kyocera has developed many industrial chains such as equipment, components, automobile, information & communication, life and environmental protection. The main business includes electronic components, ceramic packaging for MEMS sensors, LTCC packaging for RF modules, optical communication connectors, ceramic multilayer substrate for ECU in automobiles and millimeter wave radar antenna substrate. Kyocera can provide more than 200 kinds of ceramic materials, with high purity, ultrafine and high performance ceramic powder manufacturing technology and process, as well as large sintering furnace, advanced molding, processing and design technology. Their bioceramics, dielectric ceramics, electronic ceramics, cermets, microwave dielectric ceramics and chip multilayer ceramics products have excellent properties, such as high strength, high biocompatibility and durability, help semiconductor, medical equipment, electronics and environmental protection industries to get a high-speed development. Kyocera's revenue in fiscal 2019 was $14.9 billion. The keys to its success are:
It has mastered the core technology of ceramics early, completed the vertical integration layout from materials to devices, and continuously integrated industrial chain technology and customer resources to expand business through mergers and acquisitions. The amoeba business model has solved the problems of low efficiency and high management cost. In addition, there also have the policy supports from governement, and favorable international market environment.
Japanese component manufactures, the reasons of their success are the accumulation of materials technology, a long period's accumulation of technology exploration "Know - How" during the manufacturing process, supporting from advanced downstream, quality priority & high-end priority strategy, choice and concentrated strategy, current active layout in autos, robots, high-end manufacturing, industrial control, aerospace etc.
Summary and enlightenment of passive components supply chain
First, the trend of passive components represented by MLCC: chip miniaturization, micromation, large capacitance, lead-free and environment-friendly. Barriers to passive components: technology, market (reputation, certification cycle), capital, production safety and environment.
Second, in the supply chain, the two strategies of price priority / quality priority should be comprehensively studied and analyzed. In the long term, price priority will eventually go to a dead end. Quality priority is a long-term better solution, while price priority can only be used as an expedient.
Third, the overall output of passive components is low, the upstream material market segment is small, but the integrity of the supply chain is indispensable, any blank or loophole may have shock risk at the crucial time. Passive components are also affected by the periodicity of the electronics industry, manufacturers need to keep flexible space during the expanding, to deal with the potential hysteretic challenges of stocks and price.
Fourth, a tech War makes all companies really realize the importance of local supply chain. Another way is to try to create a supply chain alliance. In addition, the core manufacturer of supply chain should change the excessive exploitation of his small size suppliers, should earn benefit from the technology upgrades, supply chain management improvement, leaving the growth space to partners, to foster long-term partners, improve the competitiveness of technology, production process and materials of supply chain.
To upgrade industries and achieve high quality development, what we need is a spirit of innovation and craftsmanship. In essence, this requires institutional and cultural changes, as well as a scientific spirit.
(Report cover from CeramTec)
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