Booking and inventory levels have stabilized, albeit at a lower level. Demand for AI applications and Chinese EVs are the main demand drivers for Passive components.

• Most manufacturers of passive components have reported steady bookings, with no significant reductions in demand. Some manufacturers are observing signs of increasing demand.

• Most manufacturers have reported 60% - 80% capacity utilization rates, with lead times remaining stable. Book-to-bill ratios are stable at 1:1, reflecting a balanced market dynamic.

• In response to China's ongoing economic stimulus measures, which include doubling subsidies for EVs from 10% to 20% to replace internal combustion engine vehicles, the demand within the Chinese market continues to support the passive component sector.

• Looking ahead, many passive component manufacturers anticipate a market recovery, projecting visible improvements by mid-2025.

China Plus One strategy is picking up pace, with more customers requesting manufacturers for non-China non-Taiwan solutions

• The "China Plus One" strategy is gaining momentum, as manufacturers are increasingly expanding capacity outside of China and Taiwan, notably in ASEAN countries such as Malaysia, Thailand, Vietnam, and India.
• This shift is driven by a growing number of customers seeking to diversify their supply chains away from Chinese and Taiwanese sources, enhancing risk management and resilience in their operational strategies.

SUPPLY

• Most suppliers are reporting ratios slightly below 1:1.
• Manufacturers continue to target high-volume parts to maintain their utilization, with some manufacturers revising their NRND (Not recommended for new design) capacitors back to production parts.
• With limited suppliers in super high capacitance components, there is limited flexibility in upside or short-to-lead time orders.
• Lead times remain stable between 12 to 16 weeks. While manufacturers with extended lead times are working on reducing between 2-4 weeks, Chinese manufacturers are offering lead times as short as 6 weeks.
• Specialty MLCC for automotive usage may face supply chain challenges due to the increased demand. 
• China’s consumer market and mobile phone orders have slightly increased but not to the extent that it impacts overall supply.
• Distribution inventory levels are maintained at 2-3 months, with an expected dip in the channel’s Book-to-Bill ratios.
• Regional Variants – Utilization Rates

Country/Region	Utilization Rates
Japan	Japanese manufacturers: Approximately 80%
Taiwan	Taiwanese manufacturers: Around 60%
Korea	Korean suppliers: 90%
The US	US manufacturers: Between 60-70%

 

MARKET DYNAMICS

• There was a slight recovery in global smartphone sales in the second half of 2024, spurred by the release of new models by US and Korean manufacturers. Chinese market demand is expected to grow in the second half of 2025.
• Sales of Battery Electric Vehicles (BEVs) have slowed, with Plug-in Hybrid Electric Vehicles (PHEVs) capturing more market demand. The Chinese EV market continues to show strong demand.
• Server market growth is primarily driven by increased demand for AI applications, which has led to high consumption of super high capacitance components, potentially constraining MLCC supply.
• Global manufacturers are prepared to implement China+1 strategies as needed. Chinese manufacturers are exploring opportunities to capture market share outside China and are assessing the feasibility of establishing facilities primarily in Southeast Asia.

 

PRICE

• Manufacturers are experiencing a continued reduction in operating margins, leading to minimal cost movement.
• Despite these challenges, manufacturers are focused on defending their market share.
• Prices for specialty MLCCs, such as those used in aerospace, medical, and military markets, remain elevated due to rising raw material costs.

SUPPLY

• Demand for MnO2 Tantalum Capacitors softened in Q4, with overall capacity utilization around 70% and Book to Bill ratios averaging 0.9:1.
• The demand for Tantalum capacitors in smaller case sizes, typically used in consumer electronics, remains stable or flat.
• Larger case sizes, often used in industrial applications and building infrastructure, are experiencing softening demand. This decline is primarily attributed to a weakening property market in China, impacting the demand for industrial and building-related components.
• Tantalum polymer products used in Telecom, AI, and networking are showing massive growth in demand. AI products are the leading driver of this demand. The average quoted lead time has extended from 16 to 30 weeks, with capacity utilization approaching full capacity at 90% and book-to-bill ratios at 1:1.2.

 

MARKET DYNAMICS

• MnO2 capacitors are classified as legacy products, and no further investment in their production or development is planned. The shift away from this technology is due to technological advancements in both MLCC and polymer capacitors.
• Manufacturers are redirecting their resources towards expanding the production of tantalum polymer capacitors. This decision is driven by the growing market demand for AI, data centers, EVs, networking, and server storage due to their superior performance and cost compared to MnO2.
• Vishay is facing critical supply issues due to a lack of free capacity – looking for supply from additional sources, such as Kemet, is necessary to ensure supply assurance.
• Recent capacity expansion Developments:

Manufacturer	Expansion Plan
AVX	AVX is constructing a new facility in Thailand dedicated to producing tantalum polymer and MLCC.
Vishay	Vishay is boosting its polymer capacitor output by 30% at its Danshui and Japanese facilities.
Kemet	Kemet is expanding its polymer capacitor production at its Suzhou, China, and Thailand facilities.

 

 

PRICE

• Tantalum MnO2 costs continue to present challenges as suppliers gradually shift their focus away from this product due to persistently high raw material costs, making it a less competitive technology. Pricing for this material is projected to remain relatively flat but elevated throughout the year.
• Prices for legacy products such as wet tantalum and military series are expected to keep increasing due to the absence of significant volume in their production, leading to higher production costs and increased product prices.
• Tantalum polymer pricing is projected to remain flat; however, price increases could potentially occur due to high demand and capacity constraints driven by rapidly expanding demand across Networking, AI, Telecom, and Storage.

 

SUPPLY

• Demand for automotive-grade aluminum capacitors has remained stable, with an expected uptick as the automotive industry shifts from Internal Combustion Engine (ICE) vehicles to Electric Vehicles (EVs), increasing the capacitor content per car. The Industrial, Networking, and Consumer sectors are showing modest signs of recovery, while the Renewable energy sector remains sluggish.
• Japanese Electrolytic manufacturers report an average capacity utilization of approximately 70%. Lead times for aluminum capacitors have improved, with Japanese manufacturers currently quoting 16-24 weeks, while Taiwanese and Chinese manufacturers are quoting improved lead times of 8-12 weeks.
• The supply situation for hybrid capacitors used in automotive, networking, and telecommunications has dramatically improved. Lead times for these capacitors are now quoted at 16-24 weeks, with capacity utilization reported between 70-80%.

 

MARKET DYNAMICS

• Most key manufacturers in the market are strategically expanding their facilities to capture market share and meet growing demand. Panasonic continues to lead the market in technology and capacity.
• Aihua has advanced to become the third largest global manufacturer, emphasizing a full range of products including film capacitors, showcasing their commitment to providing reliable and widely applicable capacitor solutions across various industries.
• Japanese suppliers hold a dominant market share in the automotive and industrial segments, contributing approximately 70% of their revenue from these areas. Meanwhile, Taiwanese and Chinese manufacturers are increasingly focusing on the Chinese market.
• Elna has announced plans to NRND (Not Recommended for New Design) all series of Supercap with a plan to EOL (End of Life) the product soon, positioning NEC-Tokin (Kemet) to quickly become the sole, key supplier in the market.
• Kyocera has confirmed production delays for the migration of former ROHM products to their new facilities in Thailand until October 2025.

 

PRICE

• Aluminum and film capacitor pricing is expected to remain stable, influenced by high costs of critical raw materials such as aluminum foil and copper, alongside elevated electricity and operational expenses.
• A softening in prices for electrolytic/film capacitors in the consumer segment is anticipated, driven by intense competition from Taiwanese and Chinese manufacturers. However, pricing for automotive-grade capacitors remains robust, primarily due to the dominance of Japanese manufacturers in this sector.
• Supercapacitor prices are gradually increasing due to a limited supply base and the recent announcement of Elna’s withdrawal from the market.

 

SUPPLY

• Capacity utilization is reported to be between 70% and 85% across most suppliers.
• Lead times remain stable for the majority of suppliers.
• Supply for Inductors and Filters produced in Murata Japan’s Anamizu factory has resumed while production for large case size DLW series will fully resume by early 2025.
• Inventory has normalized with Book-to-Bill ratios generally quoted to be around 1:1.

Inductor

• Multilayer Chip Inductors: The lead time now stands at 10-14 weeks. TDK's MLF/MLZ 1005/1608/2012 series remains at 28 weeks since the last quarter's improvement.
• Molded Inductors: Lead times are stable across various models. Vishay’s IHLP series shows an improvement with consistent 12-week lead times across several models (IHLP2020, IHLP2525, IHLP4040, IHLP5050, IHLP6767, IHLP8787). TDK’s SPM series maintains a 28-week lead time for both large and small case sizes.
• Murata’s LQH Series: Inductor lead times are between 16 – 20 weeks following the recent resumption of production.

Filter

• Lead times generally at 10-14 weeks. TDK’s MMZ/MPZ and ACM/ACT remain at 20 weeks.
• Murata’s DLW44S/DLW5AH resumed production in the Anamizu factory in November 2024 with delivery confirmations each week and is now expected to be fully operational by early 2025.

Transformer

• The availability of the crucial raw material - ferrite core - has returned to normal levels. Lead times have improved, though flexibility remains limited.

 

MARKET DYNAMICS

CAPACITY EXPANSION TRENDS:

• Global manufacturers are actively expanding in Southeast Asia in countries like Vietnam, Thailand, Malaysia, the Philippines, etc 
• These capacity expansions cover both new and existing facilities.
• Some Chinese manufacturers, originally with centers of operation (COO) only in China, are also considering new sites in Southeast Asia in response to shifting market dynamics.
• Taiwanese manufacturers are adjusting strategies in light of some customers implementing Non-China / Non-Taiwan policies.

COST DYNAMICS IN CHINA:

• Rising costs in southern China are leading to an increase in new start-ups and expansions into western and central China.
• This shift is primarily motivated by increased costs in labor, facilities, and other related expenses.

 

PRICE

• Pricing trend remains stable – in line with last quarter.
  • Prices are relatively stable due to minimal logistical challenges and decreased demand. 
  • Suppliers remain conservative while continuing to focus on small-size SMD inductors and ferrite bead products.
  • Specialty and legacy SMD inductors and filters pricing has also remained stable.
• Customized inductors and transformers manufactured in the US/North Mexico are seeing labor costs increase – we are also seeing more production ramp in this region in recent quarters.
• Increased costs of key raw materials used in the production of inductors and filters in recent years have impacted suppliers’ costs.
  • Copper – for wire-wound type
  • Silver – for multi-layer type

 

SUPPLY

• The market remains soft for most major segments, except AI and 5G/6G-related applications, with most suppliers projecting a market uptick in the second half of 2025.
• Book-to-bill ratios are around 0.8 – 1:1, with capacity utilization averaging 70% to 90%, depending on the products. Higher utilization is noted for smaller case sizes, automotive grade, and higher frequency products.
• Lower capacity utilization may force suppliers to implement factory shutdowns or shorten working hours, resulting in limited flexibility to respond to sudden demand increases.
• Global market demand for Crystals is expected to double by 2030, focusing on smaller-size packages and automotive-grade products. Despite capacity expansions in the last two years, further expansion plans are on hold as supply continues to exceed demand.
• Raw material supply for ceramic packages has stabilized and is no longer a constraint.
• Raw material IC supply has generally improved, though longer lead times persist for certain products. The announcement of End Of Life for some mature IC products has further impacted certain Oscillator productions.
• Lead times for most products have returned to normal levels, with KHz and MHz Crystals quoted at 8 to 12 weeks, and Oscillators ranging from 12 to 16 weeks. Automotive-grade products have an extended lead time of an additional 2 weeks.
• Most Tier 1 and 2 suppliers have already ended or are planning to end-of-life larger-size packages, emphasizing the need for downsizing to ensure better pricing and supply risk mitigation.
• Ceramic resonators’ lead time remains stable at 8 to 10 weeks.
• Generally, there are no products on supply allocation.

MARKET DYNAMICS

• Suppliers are exploring manufacturing locations outside of China due to US-China geopolitical tensions. TXC has invested in new locations in Aomori (Japan) and Surabaya (Indonesia). Raltron and Taitien are also setting up new production sites in Vietnam, with factories expected to be operational by 2025. Hosonic is investing in a facility in Gunma (Japan), expected to be ready by 2026.
• Kyocera has established new manufacturing lines for Crystal production in Hanoi (Vietnam), specifically for 2016 and 3225 sizes.
• Murata is consolidating Ceramic Resonator production at their Himi factory in Japan.
• Suppliers are increasingly focusing on Oscillator products, which offer higher margins and faceless market competition.
• TXC continues to expand its range of Automotive grade products.
• NEL Frequency Controls has been fully integrated into Abracon.
• Kyocera has completed the acquisition of Bliley Technologies. Manufacturing operations from Bliley Technologies in Erie, PA, will be transferred to the new facility at KAVX in Erie, PA, with the transition beginning in December 2024 and completion scheduled for April 2025.
• An increasing number of products are going obsolete due to maturity or the unavailability of raw materials, necessitating OEMs to design their products in alignment with suppliers’ latest technology roadmaps.
• Downsizing is essential; recommended packages include 1610 size for KHz Crystals, 1612 or 2016 size for MHz Crystals, and 2520 or 3225 size for SPXO.
• If there is a need to use HC49 Metal-can Crystals, approval of Taiwanese/Chinese suppliers is suggested.

PRICE

• Price is on a downward trend, with cost reductions being more prevalent on smaller-size Crystal products. Suppliers are becoming more aggressive in offering cost reductions to maintain or gain market share. It is advisable to approve multiple manufacturers where possible to leverage competitive tension.
• Prices remain flat for the larger size Crystal products.
• Marginal cost reductions are available on CMOS Oscillators, while pricing remains flat for Differential Oscillators.
• Labor costs continue to increase, impacting supplier margins.

SUPPLY

• The majority of suppliers are reporting book-to-bill ratios in the range of 1.0 – 1.3.
• Production utilization for the majority of products is around 70% to 80%, except for circuit breakers, which are at a lower 60% utilization rate.
• Inventory levels are maintained at an ideal level of approximately three months.
• There has been little variation in lead times from the preceding quarter:
  • Varistors: 12-18 weeks
  • Fuses: 14-18 weeks
  • Gas Discharge Tube (GDT): 12-16 weeks
  • Circuit-Breakers: 6-12 weeks 
• The supply and price of neon gas have stabilized, thanks to rising production innovations in Japan and South Korea. Notably, SK Hynix's initiative to use recycled neon gas for chip production and ongoing development efforts to find cheaper alternatives, such as Argon gas, have contributed to this stabilization.

MARKET DYNAMICS

• Circuit Protection manufacturers continue to project a long-term positive outlook in the market segments of Automotive, Renewable Energy, and data centers.
• Due to prolonged bleak market conditions, some manufacturers have engaged in cost-saving activities, including retrenchments and reductions in production operations.
• In light of current market projections, no manufacturers have indicated plans for capacity expansion.
• No significant acquisitions were announced by any manufacturer during this period.

 

PRICE

• Gold and Silver prices continue to soar amidst current geopolitical conditions.
• Copper prices have declined toward levels seen in Q1 2024. Copper is extensively used in the majority of circuit protection devices.
• Price decreases are observed for Varistor and Fuse products, while Gas-Discharge-Tubes prices remain flat.
• Circuit-breaker manufacturers have announced forthcoming cost increases in the first half of 2025, attributable to escalating operational and material costs.
• Suppliers are carefully examining the potential ramifications of post-election US trade policies and any major shifts in tariffs.

SUPPLY

• The continual flat-to-weak market sentiment has led to a major improvement in the supply of resistors.
• The market is projected to gradually recover by Q2 2025, with anticipated growth in the second half of the year, driven by the automotive sector (particularly EV infrastructure), AI-related applications, and a modest rise in demand for PCs and notebooks.
• The book-to-bill ratio for major manufacturers from the United States, Taiwan, and Japan ranges from 1.0 to 1.2, with their capacity utilization rates approximately 60% to 80%.
• Vishay Dale maintains a book-to-bill ratio of 1.2, primarily driven by strong demand for military-grade products, which have a book-to-bill ratio of 3.0 due to a demand surge from the Defense segment. Lead times for military-grade leaded film & wire-wound resistors have extended beyond three years.
• Vishay has significantly improved the supply of current sense, MELF, leaded resistors, and thin film products (excluding military-grade products) through capacity expansion.
• Taiwanese manufacturers currently have inventory levels of around 2 months, which is considered low. Plans are in place to increase inventory to an optimal level of 3 months.
• The majority of manufacturers have decided to maintain their current capacity utilization rates due to market uncertainty. However, distribution channels have started placing new orders with manufacturers in preparation to meet projected future market demands.

MARKET DYNAMICS

RAPID TRANSFORMATION OF TECHNOLOGY IN THE COMPETITIVE LANDSCAPE

• The competitive landscape is undergoing rapid technological transformation. Vishay retains its position as the technology leader in resistors but faces increasing competition, particularly from lower technology players in the market of metal strip current-sensing resistors.
• Japanese suppliers, except KOA, have shifted their focus away from mature or standard products like thick film resistors and arrays, which are less profitable. This strategic change has affected the supply dynamics, with remaining suppliers continuing to support overall market demand.
• There is a growing trend among passive component suppliers to offer current-sensing metal resistors alongside other non-resistive products. This expansion is driven by increasing demand for such resistors in applications like Battery Management Systems (BMS) in Electric Vehicles (EV) and Artificial Intelligence data centers.

RECENT CAPACITY EXPANSION DEVELOPMENTS

• Major electronic component manufacturers are making substantial investments and strategizing capacity expansions through 2030, primarily focusing on thick film, thin film, and current sense products. While production output gradually increases, a significant surge is expected in 2026.
• Some manufacturers are expanding their capacity by outsourcing production to other manufacturers.
• Taiwanese suppliers have achieved their capacity expansion goals for thick-film resistors, now covering almost 40% of the supply capacity. Meanwhile, aggressive capacity investments have been observed from the Japanese supply base.
• Thin-film resistor suppliers are expanding their capacity, with plans to double their capacity from 2026 onwards.
• Suppliers like Vishay are making substantial investments in military-grade resistors, particularly in leaded, wire-wound, and thin film types, driven by a significant increase in demand due to rising geopolitical tensions.
• Vishay Dale is planning an expansion for its current-sensing metal resistors and aims to retain its top-ranking global position.
• Manufacturers invest in regions such as Mexico, Germany, Japan, and Malaysia to diversify their manufacturing bases as part of a “China+1” strategy. Concurrently, the "China for China" strategy focuses on strengthening China’s domestic market and advancing technological capabilities.

 

PRICE

• Pricing for both General and automotive-grade products is experiencing flat to slight reductions, while prices for Military-grade products are increasing.Suppliers are actively competing for a major share of the thick film resistors market as they look to utilize current or new production capacity.
• Prices for automotive grade parts are projected to remain flat to slightly decrease for common case sizes.
• Military-grade products, such as leaded film & wire-wound resistors, are experiencing price increases due to high demand driven by current geopolitical market conditions.
• Key raw materials for thick-film resistors, including Palladium and Ruthenium, remained relatively stable in supply and price throughout 2024.
• Potential new tariffs following the US Election may exert pressure on prices in 2025.