Here we will be discussing why quality control is essential in supply chains and how quality control in production can be improved.
The MLCC Shortage: Will it Continue in 2020?
What is an MLCC?
Multi-layered ceramic chip capacitors, or MLCCs, are surface-mounted, fixed-value capacitors with alternating layers of metal and ceramic which acts as the dielectric. MLCCs are used in a higher volume than any other type of capacitor, in everything from smartphones to electric vehicles.
The current state of the MLCC shortage
Because of the popularity of MLCCs, there has been an industry-wide shortage for the past two years. Currently, lead times are up to 50 weeks on new orders, some suppliers aren’t accepting new orders for MLCCs and others are cancelling existing orders.
In response to the shortage, some component manufacturers have imposed allocations on the amount of MLCCs that can be ordered by OEMs, and many have increased the price of their MLCCs, even applying this increase to orders that have already been placed. Due to this, many OEMs are struggling to complete their own productions and are reaching line-stops.
Why has there been an MLCC shortage?
Put simply, demand has outstripped supply when it comes to MLCCs. MLCCs have been in such high demand due to their use in smartphones, cameras, portable computing and electric vehicles. This demand is set to increase even more with the widespread introduction of 5G networks, with both the cells and new generation phones requiring even more MLCCs than their predecessors.
The increase in demand for MLCCs from these industries has been higher than anticipated and manufacturers have struggled to keep up. Smartphones and computing technologies have proven to be industries that will continue to grow as consumers continually look to upgrade to the newest model. As the technology of these devices becomes more sophisticated, they require more MLCCs to operate. Where an iPhone 6s requires only 500 MLCCs per handset, an iPhone X requires 1000.
The Internet of Things has also increased demand for MLCCs in devices which would have previously required far less. Plus, whilst the electric car industry is still growing, the number of MLCCs needed by an electric car like the Tesla Model 3 is almost 10,000. The development of driverless car technology and future bans on internal combustion engines will push that figure even higher.
These aren’t the only industries that require MLCCs either, but due to the continued growth of smartphones, electric vehicles and portable computing, other industries suffer more when it comes to availability and lead times.
Will the MLCC shortage continue?
On top of this substantial market demand, component manufacturers face their own problems in producing MLCCs. The manufacturing process for MLCCs results in varying yields, which is often unprofitable to smaller manufacturers.
Despite the price increase of MLCCs, they are still very inexpensive, resulting in low profit margins. This fuels a reluctance for manufacturers to invest too much into them, when other more profitable components can be produced. Even those willing to invest in MLCC production face significant wait times on the tooling equipment necessary to set up MLCC manufacturing machines.
This shortage can’t go on forever, but many expect it to continue for at least three years, with a worsening of the situation in the short term before it starts to improve. Manufacturers will eventually increase production capacity, but combating the continued shortage at this time falls on those coordinating the supply chains. They must be able to forecast the demand for MLCC components and prepare their orders realistically against these projected sales.
Potential alternatives OEMs can look for
Whilst we wait for the MLCC supply to match demand, the best course of action is to look for alternatives. Whilst using alternative suppliers in times of shortages often works for other components, this shortage is industry-wide, and not a problem exclusive to individual suppliers.
Instead, some OEMs may look to replace their MLCCs with different capacitors. Tantalum capacitors can be used in place of MLCCs in some applications, but these also have long lead times, so the best substitute for MLCCs in most cases are polymer capacitors.
Polymer capacitors are electrolytic capacitors which are available in surface-mounted packages and they can be used to replace MLCCs in applications such as in power supplies. Polymers take up less surface area and cost less than MLCCs but may not be appropriate in all situations. For example, polymer caps are polarised, so are not appropriate for use in circuits with an AC signal or a reverse-bias. Polymers also aren’t available in the low capacitance values that MLCCs are.
Planning ahead using forecasts is the first step any OEM should take to combat the MLCC shortage but if you are looking to replace the MLCCs in your product, it is advised to consider a redesign that caters for the new component.
Market volatility such as the MLCC shortage provides OEMs with supply chain challenges. As a global and independent electronic component distributor with experience in hard-to-find component sourcing, we might be able to help you meet your supply chain needs. Get in touch today for more information.