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Price erosion for chip caps unchanged

Posted: 05 May 2004 ?? ?Print Version ?Bookmark and Share

Keywords:chip capacitors? isuppli? ems? oem? fujicon electric?

Price erosion for chip capacitors, which has slowed since the middle of last year, will remain unchanged this year, market research firm iSuppli Corp. forecasts. Before leveling off, prices had been on a constant slide since early 2001.

However, the growing influence of mainland China manufacturers, which now supply a quarter of the world's capacitors, is cushioning fears of skyrocketing prices.

"Most of mainland China suppliers' end customers are mainland-based EMS and OEM companies - those that are most focused on cost and have the power to select suppliers for their approved-vendors list," says Jason Ma, iSuppli analyst. He adds that "Capacitor suppliers in mainland China will not raise prices at this time so that they can maintain their market share."

Production from mainland manufacturers is also causing a capacity glut, says Raymond Lee, sales manager of Fujicon Electric Co. Ltd.

Already, mainland makers are planning to cut quotes for chip capacitors by 5 to 10 percent, particularly their exports.

However, Eric Yeh, director of Holy Stone Ent. Co. Ltd, predicts that there will be a shortage of 0402 chip capacitors, and prices of this model may increase. Yeh quotes the 0402 models at NT$55 ($1.61 at NT$34.08:$1) for every 1,000 units while the 0603 models are priced at NT$40 to NT$50 ($1.17 to $1.47).

A number of chip capacitor makers in mainland China are planning to slash prices, due to intense competition, particularly in the overseas market. Ningxia Xingri Electronics Co. Ltd, one of the world's largest makers of chip tantalum capacitors, will hold its prices steady. "Since the cost of silver and palladium has not changed, we will not lower prices of our chip capacitors," says Liu Peining, sales manager.

Quotes for Xingri Electronics' chip capacitors were reduced by 20 percent last year. "Since our competitors overseas have lowered their quotes, we have no choice but to follow suit in order to remain competitive," Liu explains.

Meanwhile, Yeh warns of price hikes for the 0402 chip capacitors, which may run short against increasing demand.

Ma of iSuppli bolsters Yeh's observation. "The supply of both ceramic and tantalum capacitors is tightening, with 0402-size capacitors the tightest because of the huge demand from mobile handsets."

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