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Price erosion for tantalum capacitors will
slow
Purchasing - November 2003
The tantalum capacitor market will post modest grow over the next
four years, but will lose market share to ceramic and aluminum
electrolytic capacitors. Many tantalum capacitors have been designed
out of cell phones and computers after the tantalum capacitor
shortage of 2000.
However, China will be a bright spot for tantalum capacitor
manufacturers. Many manufacturers in China weren't around for the
shortages of 2000 and are designing tantalum capacitors into new
equipment. As a result the tantalum capacitor market will grow from
about $2 billion in 2002 to $2.7 billion in 2007, according to
market intelligence provider iSuppli. "The tantalum capacitor market
will grow, but not as rapidly as the ceramic and aluminum capacitor
markets will," says Shawn Wood, an iSuppli analyst. He says
tantalum's share of the capacitor market has declined 10% since
2000. Six percent of the share went to ceramics, 3% to aluminum and
1% to other dielectrics.
Wood says buyers can expect prices to continue to fall in 2004. In
North America prices have fallen about 27% from one year ago and in
Asia the price drop was 22%, he says. "That sounds counterintuitive,
but the reason is North America's prices started out at a higher
base point than those in Asia," he adds. Over the next year price
erosion will be slower than in 2003.
Wood says demand for tantalum capacitors has increased about 4%
since last year. Manufactures say demand continues to build.
"Demand
for tantalum capacitors has been picking up rapidly over the last
three months, mostly driven by Asia," says Dan Lane, marketing
manager tantalum and leaded ceramic products for AVX Corp. He says
while prices have been dropping about 5% per quarter, pricing should
stabilize in 2004 because of growing demand and lower inventories.
Jim Wright, vice president of marketing for capacitor supplier
NIC Components, says tantalum capacitor demand is much
stronger than last year. "There is more demand today than there was
12 months ago, but the requirements are far less than they were in
1999 and 2000," he says. "The size of the tantalum market has
shrunk. Ceramic capacitors have been taking a larger and larger
share of the capacitor business."
According to Wright, the reason is ceramic capacitor manufacturers
have been increasing the capacitance values of ceramics. "Higher
capacitance values have been pretty much exclusively the territory
of tantalums," he says. "A few years ago capacitor values of
ceramics were about one microfarad. Everything above that was
tantalum. Today ceramics are available up to 100 microfarad. The
higher capacitance value of ceramics has been putting price pressure
on tantalums and taking away business," he adds.
Tantalum capacitors will be under more pressure because there are
more manufacturers who soon will be making higher capacitance value
ceramic capacitors. "Right now there are only four or five players
in the ceramics world who can produce up to 100 microfarads," says
Wright. "Two years from now there will be 20. There will be even
more pressure to reduce prices. The writing is on the wall for
tantalum."
There's no question the tantalum capacitor shortages of 2000
adversely affected the tantalum capacitor market. Many cell phone
manufacturers started to design out tantalum capacitors from their
handsets in 2001 and that trend continues. "OEMs got a bad taste in
their mouths from the tantalum shortage and high prices of 2000,"
says Wright. "We run into customers who say, 'We aren't using any
tantalums, we switched to ceramic or aluminum capacitors.'"
Tantalum may also feel some pressure from niobium capacitors, which
are made using the same processes and techniques of tantalum caps.
"Niobium is less expensive. So it has the potential of being a lower
cost alternative," says Wright. It has the potential for higher
capacitance values. However, manufacturers have not marketed niobium
capacitors aggressively. "There are some shortcomings," says Wright.
Niobium tends to have leakage current. "It's not a perfect
dielectric. It takes a bit of tweaking to get the linkage current in
line," he says.
All of this is good news for tantalum capacitor buyers. With plenty
of competition from ceramic capacitor manufacturers, tantalum
capacitor tags will continue to fall. Buyers also need not worry
about shortages any time soon. The last shortage was caused by a
tantalum powder shortage. Tantalum powder supplies are plentiful and
will remain so for the next five years, according to industry
analysts. Because of competitive pricing, tantalum capacitors will
likely be designed into new equipment being manufactured in China.
Buyers can also expect more tantalum capacitors in smaller case
sizes. The use of small sizes such as 1608 (1.6x0.8mm) is spreading
outside Japan. Korean manufacturers are using the case size more in
cell phone designs. Some capacitor manufacturers are sampling a 1005
(1.0x0.5mm) size. By 2004, these should become readily available,
with capacitance values up to 4µF.
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