In the past two years, chips of various brands have risen one after another, with an increase ranging from several times to more than ten times. Many people have seized this wave of market and their annual income has exceeded the past ten years, directly reaching financial freedo

"10 9 losses for MLCC."

In the past two years, chips of various brands have risen one after another, with an increase ranging from several times to more than ten times. Many people have seized this wave of market conditions and their annual income has topped the past ten years, directly reaching financial freedom. But this group of people does not include those who specialize in MLCC. In their words, " was worse last year, and this year was even worse. I can't talk about in the past three months."

MLCC is known as "electronics industry rice". It is one of the most used passive electronic components in the world. Almost all consumer electronics need to use MLCC components. From 2017 to the first half of 2018, it was a big year for MLCC. MLCC with a growth of more than ten times or even dozens of times, Guoju, and a group of people who became rich because of MLCC. This situation is the same as the active IC that has soared in the past two years. Later, due to the plunge of MLCC in the second half of 2018, it gradually disappeared from the market discussion.

Recently, MLCC has once again entered the public eye. It is a discussion about its " inventory bottomed out, thanks to a lot, and it has no way to fall ". From the past "Internet celebrity" to no one caring about it, why don't everyone pay attention to MLCC? This article will try to answer you from the following aspects:

1. What is the real market situation of MLCC?

2. Instead of rising, how do you think about the price of MLCC inverted ?

3. Who made the money from MLCC?

01

MLCC Market

half is a glacier, Half is flame

Entering 2022, the "ice and fire" phenomenon in the chip industry is becoming more and more serious: on the one hand, the demand for consumer electronics market represented by mobile phones and PCs is weak, and order-cutting frequent order-cutting, driving high inventory prices such as ICs, CIS, memory chips, and PA chips fell; on the other hand, the demand for automobiles, industrial controls, etc. represented by new energy vehicles is strong, and the prices of related chips are still strong.

performs the same in the MLCC market: the price of consumer-grade MLCC is almost inverted, and there is a significant out-of-stock in automotive-grade large-size and high-capacity , and the delivery time for -related MLCC has reached 40 months .

MLCC is called "electronics industrial rice", and mainly plays the role of bypass, de-root, filtering and energy storage.

A 5G mobile phone uses more than 1,000 MLCCs, and a pure electric vehicle has MLCC usage of 18,000. Under normal circumstances, ordinary MLCCs only cost a few cents, and the most expensive one is only a few cents per piece. Cheap, big bowls, and inconspicuous are the background colors of MLCC. In the early years, some MLCC traders always joked about themselves: " takes the money to sell cabbage and cares about selling X fans ."

Starting from the second half of 2017, the first-tier MLCC manufacturers Murata and TDK have withdrawn from the low-end capacitor market, and the shortage of smartphones, cars, mining, 5G, wireless charging, etc. have been strongly driven. The MLCC market is in short supply and the market is rapidly detonated. There was a situation where " buys when you have the goods, and don't ask the price of ". Originally, MLCC, which was a few cents a little, rose to a few cents a little, and the increase ranged from several times to dozens of times. The MLCC, a small thing, quickly went from unknown to well-known in the industry.

After 2018, after MLCC's story of getting rich, some people left sadly, and some people started entering. However, after 2018, although the MLCC market has had several ups and downs, it has not reproduced the previous round of price increases.

Overall, the MLCC market has undergone the following changes in recent years:

• April 2016-May 2017: The industry enters a destocking cycle.
• June 2017 - September 2018: The market stockpiling began in June 2017. From September to before the Spring Festival, the price of downstream whole machine factories increased slightly. In September 2018, the price increase reached a climax. The capacitor increased by nearly ten times, and some models even reached dozens of times.
• From October 2019 to February 2020, the price of capacitors gradually fell.
• In March 2020, affected by the epidemic and factors such as Huaqiangbei lockdown, after the beginning of spring, all terminal factories panic preparations and suddenly pushed up the capacitor prices significantly.
• May 2020-August 2020: Affected by multiple factors such as the epidemic, foreign trade, and domestic demand, market demand slowed down, and capacitor prices gradually fell.
• September 2020-May 2021: On the one hand, strong downstream market demand for electronic products such as PC/tablets has driven MLCC demand. On the other hand, due to the demand for 5G terminals exceeding expectations and the continued high growth of new energy vehicles, the gap in high MLCC demand has further expanded.
• June 2021-To date: The market represented by mobile phones and PCs generally believes that the market is weakening. In the second half of last year, the market began to sell goods, and MLCC has been falling all the way, while the prices of industrial control and automotive grade MLCC are still firm.

The price change of a universal 104-capacity 0402 size can be more intuitively understood. This MLCC is 2 yuan/k pcscs under normal conditions. It was sold at the highest rate in 2018 to 30 yuan/k pcs. In 2019, the price was basically between 4-5 yuan/k pcscs. In addition to a slight increase in 2020 and the beginning of 2021, its overall price trend has been declining, and the current price is close to the level before the price increase.

Currently, it has learned from the chip spot market that the prices and demand for MLCCs such as automotive grade, industrial control, and medical grade are still strong. Some MLCC conventional materials have returned to the normal price or have returned to the normal price. The MLCC market price has even entered the historical low prices in recent years. Some industry media also pointed out that the current prices of MLCC conventional materials are inverted, and Guoju's products have been upside down 25% , Samsung upside down 20% , Fenghua Hi-Tech and Sanhuan upside down 10-15% . The fact that

was further confirmed in TrendForce's report:

has fallen on average for the whole year from the first quarter of 2021 to the first quarter of 2022, and the prices of some low-level consumer MLCCs have even touched the cost of materials. The price of industrial niche MLCC is expected to alleviate the rise in pull-down goods, with the decline remaining at 1-2%, or even the same. The price of automotive MLCC, which belongs to the annual quotation, maintains the price and volume stable.

In the past two years, the market of active IC surges and the story of getting rich has been widely circulated in the chip distribution circle, but we found that the few MLCC distributors we know have basically not changed careers and are still selling MLCC. Because in their opinion, in the distribution circle of , each component has its own channels, sources of goods, channels, and customers, which all require accumulation.

02

35Do not rise but fall

MLCC's price is inverted?

"It is not scary to have less demand. No demand at the terminal is to cut off the cause."

A trader in the market who specializes in MLCC told Xinshixiang, "The first batch of goods were sent to the end of 2020, and there were another wave of goods sent to the second half of 2020. There were many orders, and the business in 21 years was not that good, which was half of the 20 years. This year, it was cut by half. In recent months, all factories that have done business have said that they have no business, and prices have been falling since last year, and have recently reached a historical low."

started with the Amazon store closure wave in May last year. Stimulated by weak demand in the consumer electronics market, many traders began to sell goods at low prices to recover their money. "The lower the price, the more the terminal waited and watched, and dared not prepare the goods." In a panic atmosphere, MLCC entered a vicious cycle of "reducing demand for -panic-selling and cashing out ". By October last year, some general-purpose MLCCs had begun to experience price inversion.

So, how to understand the inverted price of MLCC?

First of all, we need to understand what the meaning of "price inversion" is. The price inversion here mainly refers to the market conditions of mid- and low-end MLCC, where the purchase price of agents is higher than the market price.

The transmission chain of the electronic components industry is generally based on the chip original manufacturer - agent - distributor (trader/spot merchant) - terminal customers. For some major customers, the original manufacturer will also be directly supplied, and both agents and distributors can eventually flow to terminal customers.

In the normal market environment, the advantages of agents are that the supply and price are relatively stable, the quality is reliable, and technical support is available, but the price is not obvious compared to the market price. It is generally the choice of medium and large (times) terminals or cost-insensitive terminals. Most of the small and medium-sized terminals choose to buy goods from dealer channels.

An MLCC agent who specializes in the consumer electronics market said, "From January to April last year, our business continued to grow compared with 2020, and it was obviously not possible after May. There are factors such as the impact of 'long-term and short-term materials' and the impact of Amazon's account ban affecting exports. Later, some people began to sell goods at low prices in the market, and by the fourth quarter, the price of MLCC has been inverted."

"price inversion" is not common. It is no different for component agents. How can customers place orders if they have no price advantage? More importantly, it will affect customers' decisions about stocking up. The more the price of falls, the more customers use it to buy . The most important reason for the inversion of the mid-to-low-end MLCC prices is the weakness of consumer electronics, which accounts for more than 60% of the MLCC market share of (64%, mobile phones account for 34%). If we summarize last year's market trend was "sluggish growth", this year was simply hot. Since the beginning of this year, computers and mobile phones have continued to weaken, and news of order-cutting has been released one after another. If you look closely, the range of order-cutting and price reduction is basically based on 20%.

latest data from research agency Counterpoint Research shows that China's smartphone sales fell by 14.2% year-on-year in the second quarter of 2022, hitting a new low, less than half of the historical peak sales in the fourth quarter of 2016.

or above is mainly reflected in demand side .

MLCC new capacity profile

. On the supply side, is a crazy expansion of passive components manufacturers. Since the MLCC market in 2018, major MLCC manufacturers such as Murata, Sunsuodian, TDK, , Samsung Motor , and Fenghua Hi-Tech have started to expand production in recent years.

While demand is sluggish, it is expanding production frantically. Under the catalysis of weak order cuts in consumer electronics and market selling, the inverted price of MLCC is also inevitable. In addition to this, for conventional resistance, they are still a standard industrial finished product. Excluding factors such as yield, the quality differences between different brands are very small. In some consumer electronic applications, the A brand and B brand are really not much different.

consumer-grade MLCC is in a bad state overall, and the choice is back to the buyer. Buyers naturally choose to compare the stores and choose the best from the best, which also leads to conventional products being the hardest hit area for the inverted MLCC price.

03

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Source: Founder Securities

Global passive component industry is divided into three levels: the first echelon is mainly represented by Japanese manufacturers Murata, Sun Yudian, and TDK. The Japanese are known for their high-end automotive specifications and industrial control MLCC, accounting for as high as 56%. Samsung Electric, Guoju and Huaxinke are in the second echelon, and the third echelon are domestic manufacturers represented by Fenghua Hi-Tech and Sanhuan Electronics. Among the "others" in the above categories, the middle and low ends are mainly Taiwanese and domestic MLCCs.

An electronic component manufacturer in South China said in an interview that the order volume of its company began to drop sharply in May, and started in June only 50% of the previous year, and the operating rate was only 20%-30% of the previous year. Traders on the market who specialize in MLCC also said that the orders for are now only 1/6 of that for normal market conditions or even less than those for .

But if you carefully read the financial reports of MLCC major manufacturers last year, you will obviously see that the joys and sorrows of the original manufacturers are different from those of agents and distributors: In 2021, Murata, Taiyu, Guoju, Fenghua Hi-Tech and others all set new revenue highs or historical highs in recent years.

Murata: The consolidated financial report for the 2021 fiscal year (as of March 2022) showed that net profit increased by 33% year-on-year to 314.1 billion yen, hit a new high for two consecutive years ;

is too lure: 2021 (to March 2022) the full year's pure profit report increased by 90% to 543 100 million yen ; revenue, operating benefits, regular benefits and pure benefits all hit new highs ;

TDK: revenue is 1.9 trillion yen, up 28.6% year-on-year, and net profit is 166.8 billion yen, up 49.2 year-on-year %;

Samsung: 2021 sales reached 9.675 billion won, operating profit reached 1.486.9 billion won, an increase of 25% year-on-year sales and operating profit increased by 63%;

Guoju: 2021 The combined revenue for the whole year was NT$4106.539 billion, an increase of 57.4% over last year. The gross profit margin for the full year in 2021 was 40.4%, an increase of 2.8 from last year %;

Fenghua Hi-Tech: 2021 achieved operating income of 5.055 billion yuan, breaking the 5 billion yuan mark for the first time, up 16.69% year-on-year; net profit of 951 million yuan, up 155.28% year-on-year;

Huaxinke: 2021 revenue reached 42.087 billion yuan, up 18.41% from the previous year, still hit the second highest in history ;

3 Three rings: 2021 the company achieved operating income of 62.18 RMB 100 million, a year-on-year increase of 55.69%; net profit attributable to shareholders was RMB 2.011 billion, a year-on-year increase of 39.68%;

If the time dimension is pulled to the first quarter of this year, the revenue and growth rate of the first-tier MLCC manufacturers such as Murata, Taiyu, and TDK are still strong. The growth of manufacturers focusing on consumer-grade MLCCs such as Fenghua Hi-Tech and Huaxinke has slowed down since the second half of last year, which is also corresponding to the "ice and fire" mentioned above.

At present, in the environment where consumer electronics is in a recession and consensus on order cutting, both research institutions and industry insiders know that new energy vehicles, photovoltaics, , medical care, etc. are still strong, but this channel has been occupied by original manufacturers and some agents, and the funnel of demand will ultimately not fall into the distributors' words. The electronics factory, which was previously targeted by distributors, is currently shutting down production and reducing production to fight the recession of demand.

Therefore, in the MLCC market, the difficulty of "doing long and losing too much, falling cannot fall" belongs to component distributor (trader) and agents focusing on the consumer electronics market . For the original MLCC manufacturers, they are not bad, and they are quietly expanding production while generating revenue.

04

Conclusion

When sorting out the revenue situation of various MLCC major manufacturers in recent years, the most surprising thing is Guoju.

Since its high performance in 2018, Guoju has not been affected by the industry's prosperity in recent years, and its revenue, gross profit margin and net profit margin have all been growing steadily.

If you carefully read Guoju’s financial report and Guoju Chairman Chen Taiming ’s several public speeches, you may find some answers.

• Boss Chen said that before 2017, Guoju's revenue 70% was in the standard product market , and 30% was in the special products of such as automotive, industrial regulations, medical care and other and the European, American and Japanese markets;
• After the merger of manufacturers such as Pusi and Jimei, Guoju Group 7 5% of the products belong to high-quality special products , 25% are conventional products , and MLCC accounts for 30% of revenue;
• In March this year, Guoju's single-month revenue hit a record high. Boss Chen continued to say that it is mainly because the company's demand for niche products maintains steady momentum. Among Guoju's revenue, 80% of the niche products belong to (automatic, etc.) niche products .

, and Guoju's niche products have risen from 30% to 80% are currently hot high-end markets such as automotive and industrial regulations. The recession of conventional consumer-grade MLCC only accounts for 20% of its revenue.When everyone's impression of Guoju is still on "selling goods" and restoring customer relationships, Guoju has started a merger and acquisition layout and secretly increased its hard power. Guoji is no longer the Guoji in 2017.

This wave of opportunity has been seized again.