Key Demand Drivers

• AI Applications & China’s Automotive Sector: These remain the primary demand drivers for passive components.

• AI-Driven Technology Shift: Demand for high-tech MLCCs is increasing, shifting the industry trend from downsizing to focusing on higher voltage and higher capacitance components.

• EV Market Growth in China: The Chinese EV market remains a key growth driver in the global automotive sector.

Supply & Demand Overview

• Polymer Tantalum Capacitor Shortages: Supply constraints persist due to high demand from the EV sector, AI data centers, and server applications.

• Stable Demand & Inventory: Market conditions have stabilized, with most manufacturers reporting capacity utilization rates at approximately 80%.

• Lead Times & Order Trends: Lead times remain steady, with an average Book-to-Bill ratio of 1:1.

• Market Recovery Outlook: Many passive manufacturers anticipate a recovery in the second half of 2025.

Tariffs & Manufacturing Shifts

• Tariff Increase on China-made Products: An additional 10% tariff took effect on February 1st, leading to increased demand for alternative manufacturing solutions.

• China +1 Strategy Gaining Momentum: Manufacturers are actively expanding production outside China and Taiwan, particularly in Malaysia, Thailand, Vietnam, and India.

• Kyocera has opened a huge factory in Taiwan, and Murata has expanded facilities in Thailand and recently opened a new facility in India.

SUPPLY

• Most suppliers quote a Book-to-Bill ratio of ~1:1, ranging from 0.95 at the low end to approximately 1.2 at the high end.
• Tier 1 manufacturers have a higher utilization rate, ranging from 75% to 90%, as they have leveraged the AI-driven demand for high-capacitance parts requiring more capacity. Meanwhile, Tier 2 manufacturers maintain a utilization rate of around 60%.
• Manufacturers are focusing on high-volume parts to maintain utilization and ensure their annual capacity expansion plans of 10–15% remain on schedule.
• Lead times for most manufacturers remain stable at around 12 weeks, while those with longer lead times continue to reduce them by 2–4 weeks per quarter. Chinese manufacturers still offer the shortest lead time at 6 weeks.
• We are facing constraints and limited flexibility in expediting specialty parts, particularly those used in defense, military, and aerospace.
• The mobile market is projected to remain flat or see a slight increase in demand, which is not expected to impact component availability.
• The expansion of AI servers, vehicle electrification, and AI edge terminals will drive growth in the demand for high-value MLCCs.
• Manufacturers maintain an average inventory of 1.5 to 2.5 months, while distribution levels remain higher.

 

MARKET DYNAMICS

• The smartphone market will continue to grow in 2025, but the pace will decelerate compared to 2024 due to extended device refresh cycles.

• The electric vehicle (EV) market is undergoing dynamic shifts driven by regional developments, policy changes, and competitive strategies. While the US and EU markets have slowed, China continues to experience steady growth.

• The global server market is expected to grow substantially in the year’s second half, driven by advancements in artificial intelligence (AI) and the rising demand for AI-optimized infrastructure. This will lead to high consumption of super high-capacitance MLCCs, which may face supply constraints without adequate lead time.

• Global manufacturers have been preparing for the China+1 strategy and are mainly ready to implement it as needed. Meanwhile, Chinese manufacturers are also exploring opportunities to expand outside China, considering overseas facilities, particularly in Southeast Asia.

 

PRICE

• Most manufacturers are experiencing declining operating margins, and a slowdown in cost reductions is anticipated.

• Specialty MLCCs, particularly those with high reliability standards for aerospace, medical, and military applications, continue to be priced high due to rising raw material costs.

• The demand for large case sizes, such as 1206 and 1210, remains stable. Previously, manufacturers optimized utilization by producing larger case sizes, leading to slight competition. As a result, certain common values have seen minor cost reduction opportunities.

SUPPLY

• Demand for MnO₂ Tantalum Capacitors softened in Q4, with overall capacity utilization at approximately 70% and Book-to-Bill ratios averaging 0.9:1.
• Demand for Tantalum capacitors in smaller case sizes, typically used in consumer electronics, remains stable or flat.
• Demand for larger case sizes, commonly used in industrial applications and building infrastructure, is softening, primarily due to a weakening property market in China. The downturn in China's real estate sector impacts the demand for industrial and building-related components.
• Tantalum polymer products used in telecom, AI, and networking are experiencing significant growth, with AI-driven demand being the key driver.
  • Average quoted lead times have been extended from 16 to 30 weeks.
  • Capacity utilization has reached 90%, approaching full capacity.
  • Book-to-bill ratios stand at 1:1.2.

 

MARKET DYNAMICS

• MnO₂ capacitors are classified as legacy products, with no further investment planned for their production or development. The shift away from this technology is driven by advancements in MLCC and polymer capacitors.

• Manufacturers are reallocating resources to expand the production of tantalum polymer capacitors, driven by increasing demand from AI, data centers, EVs, networking, and server storage. These capacitors offer superior performance and cost advantages compared to MnO₂.

• Vishay is facing critical supply issues due to capacity overload, making a transition of allocation to KEMET necessary during this period to ensure supply assurance.

Recent capacity expansion Developments:

Manufacturer	Expansion Plan	Location
Vishay	30% increase in polymer capacitor output	Danshui & Japan
Kemet	Expanding polymer capacitor production	Suzhou, China & Thailand
AVX	New facility for tantalum polymer and MLCC production	Thailand

 

 

PRICE

• Tantalum MnO₂ costs continue to pose challenges within the broader economic landscape. Suppliers gradually shift focus away from this product, while persistently high raw material costs further exacerbate pricing difficulties. Pricing for this material is projected to remain relatively flat throughout the year.

• Prices for legacy products, such as wet tantalum and military series, are expected to continue rising due to low production volumes. The lack of scale increases production costs, leading to increased prices.

• Tantalum polymer pricing is expected to remain more flexible, with long-term improvements anticipated as capacity expansion plans from major manufacturers support growing demand in AI, networking, and automotive sectors.

• Pricing Trends:

Product Type	Pricing Outlook	Key Factors Influencing Pricing
Tantalum MnO₂	Flat	Supplier shift, high raw material costs
Wet Tantalum & Military Series	Increasing	Low production volume, high costs
Tantalum Polymer	Flexible, improving long-term	Capacity expansions for AI, networking, and automotive

 

SUPPLY

• Demand for aluminum capacitors has softened in the automotive sector in Europe and the US. Still, EV demand remains strong in China, driven by ongoing technology integration of autonomous and AI systems into electric vehicles.
• The industrial and renewable energy sectors continue to lag in demand.
• Japanese electrolytic manufacturers are operating at 70% % -80 % capacity utilization.
• Lead times for aluminum capacitors have improved significantly:
  • Japanese manufacturers: 16–24 weeks
  • Taiwanese and Chinese manufacturers: 8–12 weeks
• The supply situation for hybrid capacitors, used in the automotive and telecommunications sectors, has greatly improved:
  • Lead times are now 12–16 weeks
  • Capacity utilization has dropped to 70%–75%

 

MARKET DYNAMICS

• Several manufacturers are strategically expanding their facilities to support long-term growth in hybrid capacitors, making significant investments to capture market share and drive innovation.

• Panasonic remains the market leader in both technology and capacity for hybrid capacitors.

• CHINSAN (Taiwan) and Nantong Jianghai (China) are positioning themselves as niche leaders in high-voltage snap-in capacitor technology for industrial and automotive applications.

• AIHUA has climbed to the #3 position in the global rankings, with a strong emphasis on offering a full product range, including film capacitors, reinforcing its commitment to reliable and widely applicable capacitor solutions.

• Japanese suppliers dominate the automotive and industrial markets with approximately 70% market share, while Taiwanese and Chinese manufacturers account for the remaining 30% and are actively working to penetrate these key markets.

• ELNA has announced the NRND (Not Recommended for New Designs) status for all supercapacitor series, with plans to phase out the product in the near future.

• Korean manufacturers VINATECH and KORCHIP are emerging as strong players, aiming to capture a significant share of the supercapacitor market.

 

PRICE

• Aluminum and film capacitor pricing is expected to remain flat due to inflated raw material costs, including aluminum foil and copper, as well as rising electricity and operational expenses.

• Price softening is anticipated for electrolytic and film capacitors in the consumer segment due to intense competition from Taiwanese and Chinese manufacturers. However, automotive capacitor pricing remains stable as Japanese manufacturers continue to dominate this segment.

• Supercapacitor prices are gradually increasing due to a limited supply base and the legacy nature of the product.

 

SUPPLY

• Capacity utilization is reported to be between 70% and 85% across most suppliers.
• Lead times remain stable for the majority of suppliers.
• Murata Japan’s Anamizu factory has resumed normal production.
• Inventory levels have normalized, with Book-to-Bill ratios generally quoted around 1:1.

Inductor

• The lead time for multilayer chip inductors is now 10–14 weeks.
• TDK’s MLF/MLZ 1005/1608/2012 lead times remain 28 weeks, following improvements last quarter.
• Molded inductor lead times remain stable.
• Vishay’s IHLP series has seen improvements in lead times:
  • IHLP2020 – 12 weeks
  • IHLP2525 – 12–14 weeks
  • IHLP4040 – 12 weeks
  • IHLP5050 – 12 weeks
  • IHLP6767 – 12 weeks
  • IHLP8787 – 12 weeks
• TDK’s SPM series lead times remain 28 weeks for both large and small case sizes.

Filter

• Lead times are generally 10–14 weeks.
• TDK’s MMZ/MPZ and ACM/ACT series remain at 20 weeks.
• Murata’s DLW44S and DLW5AH are now quoted at their standard lead time.

Transformer

• The availability of ferrite core, a crucial raw material, has returned to normal levels with improved lead times but still limited flexibility.
• Lead times remain stable at 12–24 weeks.

 

MARKET DYNAMICS

CAPACITY EXPANSION TRENDS:

• Global manufacturers are actively expanding in Southeast Asian countries such as Vietnam, Thailand, Malaysia, and the Philippines, with capacity expansions covering new and existing facilities.
• Chinese manufacturers operating solely in China are exploring new Southeast Asian sites in response to shifting market dynamics and trade concerns.
• Taiwanese manufacturers are adapting their strategies to align with customer policies favoring non-China/non-Taiwan sourcing.

COST DYNAMICS IN CHINA:

• Rising costs in southern China are driving many businesses to launch new start-ups and expand operations into the more cost-effective regions of western and central China.
• Western and central China offer lower operational costs, abundant resources, and government incentives, making them attractive locations for new business ventures and expansions.

 

PRICE

• Pricing trends remain stable, in line with the previous quarter.
• Prices have remained relatively stable due to minimal logistical challenges despite the uncertain global trading environment.
• Suppliers remain conservative, focusing on small-size SMD inductors and ferrite bead products.
• Specialty and legacy SMD inductors and filters have maintained stable pricing.
• Customized inductors and transformers manufactured in the US and North Mexico are experiencing rising labor costs, with increased production ramp-up in this region in recent quarters.
• High raw material costs continue to impact inductor and filter production, affecting supplier costs over the last few years:
  • Copper is used for wire-wound inductors
  • Silver is used for multi-layer inductors

 

SUPPLY

• The market remains soft across most significant segments, except for AI-related applications. Most suppliers expect a market recovery 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 product type.
  • Higher utilization is seen for smaller case sizes, automotive-grade, and high-frequency products.
  • Lower capacity utilization may force suppliers to implement factory shutdowns or reduced working hours, limiting flexibility to respond to sudden demand surges.
• Global demand for Crystals is expected to double by 2030, primarily for smaller package sizes and automotive-grade products.
  • Many suppliers have expanded capacity in the last two years but are now pausing further expansion due to supply exceeding demand.
• Raw material supply updates:
  • Ceramic package supply has stabilized and is no longer a constraint.
  • IC supply has generally improved, though longer lead times persist for specific products. Some IC suppliers have announced End of Life (EOL) for mature products, impacting Oscillator production.
• Lead time updates:
  • KHz and MHz Crystals: 8–12 weeks
  • Oscillators: 12–16 weeks (Automotive-grade Oscillators extended by another 2 weeks)
  • Extended lead times continue for Oscillators using legacy IC technology.
  • Ceramic resonators: 8–10 weeks
• Most Tier 1 and Tier 2 suppliers are downsizing larger package sizes, with many already phasing them out to improve pricing and mitigate supply risks.
• No products are currently under supply allocation

MARKET DYNAMICS

• Suppliers are expanding manufacturing outside China due to geopolitical tensions between the US and China. Several companies are investing in new facilities across Japan, Indonesia, Vietnam, and the US, with expected completion timelines between 2024 and 2026.
• Oscillator products are becoming a key focus area for suppliers due to higher margins and lower market competition.
• TXC continues to expand its Automotive-grade product portfolio.
• NEL Frequency Controls is now fully integrated into Abracon.
• Kyocera has completed the acquisition of Bliley Technologies, with manufacturing being relocated from Bliley’s Erie, PA facility to KAVX, Erie, PA, in a transition scheduled from December 2024 to April 2025.
• Product obsolescence is increasing due to maturing technologies and raw material shortages, making it crucial for OEMs to align with suppliers' latest technology roadmaps.
• Downsizing is essential, and the following package sizes are recommended:
  • 1610 size for KHz Crystals; 1612 or 2016 size for MHz Crystals; 2520 or 3225 size for SPXO
• For HC49 Metal-can Crystals, approval of Taiwanese or Chinese suppliers is suggested.

Manufacturer Expansion & Relocation Plans

Manufacturer	Location	Expansion Details	Expected Completion
TXC	Aomori, Japan & Surabaya, Indonesia	New facilities	Not specified
Raltron & Taitien	Vietnam	New production sites (Exploring)	2025
Hosonic	Gunma, Japan	New factory investment	2026
Kyocera	Hanoi, Vietnam	New manufacturing lines for 2016 & 3225 Crystal sizes	Not specified
Murata	Himi, Japan	Consolidating Ceramic Resonator production	Not specified
Kyocera	Erie, PA, USA	Transferring manufacturing to KAVX (via Bliley Technologies’ acquisition)	Apr 2025

 

 

PRICE

• Prices are trending downward, with cost reductions more prevalent in smaller-sized Crystal products.
• Suppliers are becoming more aggressive in offering cost reductions to maintain or expand market share. Competitive tension is key—approving multiple manufacturers where possible is recommended.
• Prices remain flat for larger-sized Crystal products.
• CMOS Oscillators have marginal cost reductions, while Differential Oscillators remain price-stable.
• Rising labor costs continue to impact supplier margins.

SUPPLY

• A significant portion of suppliers reported book-to-bill ratios between 1.0 and 1.1.
• Production utilization remained stable for most products, ranging between 70% and 80%, with Varistors being the exception, reaching 90% utilization, a 10% increase from the previous level.
• Some suppliers are facing inventory depletion, with stock levels nearing one month of supply. These suppliers are increasing production utilization to replenish inventory to an ideal range of 2.0 to 3.0 months.
• Lead times remained essentially unchanged from the previous quarter.

MARKET DYNAMICS

• Market recovery remains uneven, with modest signs of improvement reported in the aerospace and transportation sectors.
• In the automotive sector, China’s electric vehicle (EV) market remains strong, though growth is slowing.
• Artificial intelligence (AI) continues to be the key global growth driver.
• Suppliers are cautiously approaching capacity expansion, closely monitoring market recovery trends and geopolitical shifts.
  • Thinking Electronics’ Vietnam factory is expected to be operational in the first half of 2026.
• Instead of aggressive expansion, suppliers are broadening their product portfolios to meet rising demand for overcurrent and overvoltage protection solutions.
• Risk mitigation strategies related to US trade policies are pushing suppliers to proactively adopt China+1 and NCNT (Non-China, Non-Taiwan) strategies.
  • Common alternative manufacturing locations cited by suppliers include Malaysia, the Philippines, Vietnam, and Thailand.
• No significant mergers or acquisitions were announced 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-Tube 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 carefully examine the potential ramifications of post-election US trade policies and any significant tariff shifts.

SUPPLY

• The resistor market remains stable despite flat to weak market sentiment, driven by sluggish demand, geopolitical issues, and economic uncertainty across various industries.
• Market recovery is projected by the second half of 2025, primarily driven by advancements in artificial intelligence (AI) and growth in the automotive sector, particularly the electric vehicle (EV) segment.
• Manufacturers in the United States, Taiwan, and Japan are experiencing flat to slightly increasing demand, with a book-to-bill ratio between 1.0 and 1.1. Despite this, capacity utilization remains around 70% to 80%.
• Vishay Dale's book-to-bill ratio stands at 1.07, primarily supported by demand from the military sector, where the book-to-bill ratio for military-grade products is 1.43. In response, Vishay is expanding its production capacity for these products.
• Most Taiwanese and Japanese manufacturers hold inventory levels of 1 to 2 months, which is below the ideal range. Suppliers plan to increase inventory levels to 2.5 to 3 months.
• Suppliers remain cautious, closely monitoring potential revisions in US trade policies before making strategic adjustments.

MARKET DYNAMICS

RAPID TRANSFORMATION OF TECHNOLOGY IN THE COMPETITIVE LANDSCAPE

• Vishay maintains its position as a technological leader in the resistor market, particularly in high-precision resistors and innovative solutions. However, competition is intensifying from Taiwanese and Japanese manufacturers, especially in the current sense and thin film resistor segments.
• With the exception of KOA, Japanese manufacturers have reduced their focus on mature products such as thick film resistors and arrays due to low-profit margins. This strategic shift has impacted the supply chain, with the remaining suppliers now responsible for fulfilling overall market demand.
• Demand for current-sensing resistors is rising, particularly in key applications such as AI, data centers, Battery Management Systems (BMS), and Advanced Driver-Assistance Systems (ADAS) for electric vehicles. In response, manufacturers are expanding their product offerings to meet these demands.

RECENT CAPACITY EXPANSION DEVELOPMENTS

• Anticipating continued market growth through 2030, major electronic component manufacturers are making substantial capacity expansion investments. These investments are strategically focused on thick film, thin film, and current sense resistor technologies, critical for growth industries such as automotive, AI, and data centers.
• Production output gradually increases, with a significant acceleration expected in 2026.
• Taiwanese manufacturers remain dominant, holding approximately 40% of the market share. KOA continues its aggressive thick film expansion in Malaysia.
• Thin film resistor suppliers are undergoing significant capacity expansions, with total capacity expected to double by 2026 and beyond.
• Vishay, a leading manufacturer of current-sensing metal resistors, is actively planning capacity expansions to meet the rising global demand for high-precision, low-resistance components. This strategic move aims to strengthen its market leadership and maintain its No. 1 position.
• As part of their "China+1" strategy, manufacturers invest in Mexico, Germany, Japan, and Malaysia to diversify their manufacturing footprint. At the same time, a "China for China" strategy is being implemented to support China’s domestic market and enhance its technological capabilities.

 

PRICE

• Prices for general-purpose and automotive-grade resistors have slightly decreased or decreased.
• In contrast, military-grade resistor prices have increased, driven by geopolitical factors.
• Thick film technology products, including general-purpose and automotive-grade resistors, are experiencing competitive pricing strategies as suppliers aim to gain new business and maximize capacity utilization.
• Palladium pricing has remained stable since the end of 2024, while Ruthenium saw a spike in late 2024 but has since stabilized. Manufacturers continue to monitor price fluctuations in precious metals closely.