PASSIVE COMPONENT INDUSTRY MAGAZINE JUNE 2004 EDITION
In June 2004, Dennis M. Zogbi, President of Paumanok Publications, Inc. was a guest at AVX Corporation’s Solid Electrolytic Capacitor Operations in Europe. This included detailed reviews of the tantalum and niobium- oxide capacitor operations in Lanskroun, Czech Republic and Paignton in the United Kingdom. The purpose of the visit was to share data, and so AVX could verify for Paumanok Publications, Inc. and Passive Component Industry Magazine that AVX Corporation was by far the largest tantalum capacitor producer in the world in 2003, and to introduce the niobium-oxide capacitor product line to Paumanok Publications, Inc. and Passive Component Industry Magazine and to explain their success in both markets.
AVX’s Number One Position in The Global Tantalum Capacitor Market
Traditionally, AVX’s global market share in tantalum capacitors, based upon revenues, has been reported in their annual report as approximately 28% of global revenues. The related number has been used by Paumanok Publications, Inc. and global equity research analysts to substantiate their global share as being a close number two to Tokin/NEC Corporation in 2003. However, estimates today place AVX closer to $360 million worldwide, placing them a full $80 million larger than NEC/Tokin and by far the largest tantalum capacitor producer in the world. Tantalum capacitors sold by the company used in defense, medical and other specialty markets are recorded as revenues in their Advanced Products Group.
AVX Tantalum Capacitor Production Capabilities
According to AVX Corporation, the company can make either 6 billion pieces or 4 billion pieces at 100% capacity utilization. AVX can make more of the small case sizes (EIA “A,” “B,” and “P”) and less of the larger case sizes (EIA “C,” “D” and “X”) or an even mix depending upon market demand. Small case size molded tantalum chip capacitors accounted for the majority of unit shipments at AVX in 2003. AVX is also the world’s largest supplier of niobium-oxide capacitors (OxiCapTM)with monthly output of between 25 and 30 million pieces; they are now planning a multi-fold increase in niobium-oxide capacitor production at their Lanskroun, Czech Republic facility to meet rapidly growing market demand.
AVX Capacity Utilization
AVX is now above 80% capacity utilization in tantalum chip capacitors, and above 80% capacity utilization in niobium-oxide capacitors, but this is difficult to determine accurately because niobium-oxide capacitor processing and production is the same as tantalum capacitor production, so if there is greater value in producing niobium-oxide the company can switch a line from tantalum to niobium. Also if the demand by case size changes from larger to smaller case sizes, the capacity of the five main electrolytic plants (Lanskroun, Tianjin, San Salvador, Paignton and Biddeford) can be adjusted accordingly.
AVX Capacity Expansion
Capacity expansion at AVX Corporation will go from 6 billion pieces of tantalum capacitors to 6.8 billion
pieces, and from 0.3 billion pieces of niobium-oxide capacitors to 1.5 billion pieces between 2003 and the end of 2004. Current expansion plans include the new niobium processing and production facility in Lanskroun, a new building in El Salvador and the expansion of its Tianjin China tantalum plant.
Reasons for AVX’s Success in Tantalum
AVX’s success in tantalum is based upon their customer base. AVX got to be number one in tantalum capacitors through key customer accounts and key regional access, especially in Asia. One of AVX’s main customers is Sony Corporation. The new PSX from Sony will employ 23 tantalum capacitors as opposed to 18 tantalum capacitors used in the PS2. Tantalum is used in the PS2 and the PSX in certain critical board applications on the PlaystationTM because of tantalum’s reliability and that PlaystationTM is a Sony flagship product line which requires quality construction. Paumanok believes that part of AVX’s current success was their foresight and market positioning. AVX noted that they saw the US market splitting in half, with 50% of consumption moving to Asia, where AVX had better penetration than their competitors. Paumanok believes that AVX has a much larger percentage of their sales in Asia when compared to Kemet or Vishay Intertechnology.
Polymer Tantalum Capacitor Market Estimates
AVX estimates the tantalum polymer capacitor market at approximately 10% to 15% of the total tantalum capacitor unit market, the remainder have cathodes that are manganese based. AVX noted the greater majority of growth was in polymer tantalum with low ESR characteristics, and that this market was in direct and intense competition with polymer aluminum capacitors. The average unit price of a polymer tantalum capacitor is $0.13 to $0.14 per unit, which is a 40% to 50% premium over manganese-based tantalum chip designs. AVX noted the majority of volume of demand for tantalum chip capacitors (both molded and coated chips) was in mobile phones, portable audio, CPU’s for notebook PCs, VGA cards, digital video cameras, digital still cameras and DVD players. AVX emphasized a continuing growth for tantalum capacitors coming from the camera module market for applications in cellular phones, digital still, digital video camera and recorder markets.
AVX’s View of the Competition
AVX views Sanyo Video Components as a major competitor in the polymer tantalum capacitor markets on a global basis. AVX is also a major supplier of small case size tantalum chips (EIA “A”, “B” and “P” case sizes), where they feel they have a significant market advantage and where their only real competition comes from Tokin/NEC. AVX offers a 10μF tantalum capacitor in an 0402 case size using their patented
TAC production process which they believe is unmatched in the market.
AVX Lanskroun Facility- Beautiful Country
Lanskroun, Czech Republic has been the heart of the AVX tantalum capacitor production operations since 1993. The region is rich with culture and history, and the surrounding forests and rivers team with wildlife, at the center is Lanskroun with only 10,000 inhabitants. The Lanskroun factory for tantalum is located about 50 feet above the flood plain and has never been flooded, a rumor circulated by their competitors in the late 1990s. In Lanskroun, the tantalum capacitor assembly plant is 170,000 square feet and the anode plant is 200,000 square feet. The site is a massive industrial complex once owned by Tesla Corporation.
Paignton, United Kingdom- The Riviera of England
The center of AVX’s European advanced tantalum capacitor operations is located in Paignton, United Kingdom, a resort town located on the English seaside, with local culture and cuisine tied to the sea.
TAC Tantalum Capacitor Line at AVX- Unique Process
The TAC tantalum line, produced in Paignton, is a high-volume, high-value business where finished products have low ESR and small case sizes (EIA “A,” “B,” and “P”). Every single TAC capacitor at AVX undergoes extensive testing. For example, the TAC tantalum capacitor product line is used extensively in the implantable defibrillator market, which is considered one of the most mission critical electronic applications in the field. The production process for AVX’s TAC product line is unique in the industry with respect to both construction method and the automation process associated with its production. In terms of processing, the tantalum capacitor anodes are manufactured by the thousands on a single wafer that is about 2.5 inches square. The automation process for this production line is also unique in the industry; the process employs advanced robotic functions to produce the finished capacitors. The company also notes that they have received the Sony Green Partner Award, which is rare for a Western company. The AVX Tantalum Division has been RoHS Compliant/lead-free for years and only uses lead in terminations when the customer demands it, such as in the defense market.
AVX Develops Niobium-Oxide Capacitors
AVX Corporation has pioneered the development of niobium-oxide capacitors with Oxi- CapTM, which is a solid electrolytic ceramic capacitor and is a creative approach to putting high capacitance in a small case size. The Oxi- CapTM niobium-oxide has effectively competed against surface mount aluminum electrolytic, tantalum polymer and high CV/g multi-layer ceramic chip capacitors since 2003. The overall demand for niobium-oxide solutions has increased quarter-to-quarter and the expectation for the future is that this trend will continue.
Historical Development of Niobium Oxide Capacitors
AVX began development of both niobium
AVX Tantalum Capacitor Production Facility, Lanskroun, Czech Republic metal and niobium-oxide capacitors back in multiple core competencies at their research and development facility in Myrtle Beach, South Carolina, USA. This is where AVX employs technical experts in multiple dielectrics to provide solution-oriented approaches to new product development. In fact, it was AVX’s experience in ceramic capacitors that ultimately proved critical in the development of niobium-oxide capacitors which demonstrate material characteristics that are more in line with titanate ceramics than with tantalum or niobium metal.
A Look Inside the Niobium-Oxide Supply Chain
The patent for niobium-oxide for use in capacitor anodes is owned by Cabot Corporation, and AVX licenses this patent from the company. AVX has their own inhouse capability to produce their own niobium-oxide powder under this agreement The company notes niobium-oxide costs about $100.00 per pound, compared to tantalum metal powder, which costs $250 per pound, so material costs are about 60% cheaper.
AVX noted that this does not translate into a 60% savings across the board for companies wishing to switch from tantalum to niobium-oxide because some case sizes have material costs that are 80% of the CGS, while other parts have material costs that are 15% of the CGS, so prices will vary as will cost savings based upon the case sizes purchased by the customer. In many instances, a niobium-oxide capacitor will have the same price or even a higher price when compared to a tantalum capacitor with manganese based cathode, but a lower price when compared to a tantalum polymer capacitor.
The interesting aspect about niobium when compared to tantalum with respect to capacitance value per gram is that niobium-oxide capacitors have a similar maximum CV/g value when compared to polymer tantalum (about 150,000CV/g), which means that niobium-oxide capacitors could theoretically match all capacitance values in the polymer tantalum range by case size, but in most instances-at a lower price.
Customers for Niobium Oxide Capacitors
Current markets that AVX’s niobium-oxide capacitors penetrate are USB ports, infrared ports, BluetoothTM modules, modem cards and graphics cards. Paumanok’s market analysis on niobium-oxide capaci tors
indicated the expected demand for these products by endues market segment should be as shown in the
The company also noted they have a global approval for use of niobium-oxide capacitors from a major computer corporation, and that many of the Taiwanese motherboard manufacturers have also given mass approval to the niobium- oxide product line from AVX. The company also noted that several major cell phone handset manufacturers have incorporated both the niobium-oxide and the TAC tantalum capacitor solutions into their latest designs. Additionally, many of the latest consumer applications like DVD Comination Drives have niobium-oxide capacitors designed in at several of the global providers of such equipment. A major supplier of power supplies and DC/DC converters for the Data Networking industry, has also approved niobium-oxide capacitors for usage in their product lines.
Non-Ignition of Niobium Oxide Capacitors Drives Sales
AVX uses the non-burn/nonsmoke status of their niobium-oxide capacitors to target polymer tantalum
capacitors and surface mount aluminum electrolytic capacitors which cannot make this claim. Legislation in Japan, which is part of their lead-free initiative, also includes wording that demands that all end-use electronics sold in Japan must be guaranteed not to smoke. All capacitors made from metal seek oxygen and have the capacity to smoke or burn. Niobium-oxide capacitors already contain oxygen
and are based upon ceramic technology, therefore do not smoke or burn. This has been a major selling point of these capacitors in the Far East and at select customers in the West (i.e. commercial aviation).
Niobium-Oxide Technology Trends at AVX
AVX credits the development of a niobium-oxide capacitor as opposed to a niobium metal capacitor with the centralized research center in Myrtle Beach, SC, USA which combines dielectric expertise from multiple products to create solutions oriented product lines. Niobium-oxide was developed by employing electrostatic know-how (ceramic dielectric materials) to compete in an electrolytic environment against tantalum polymer and SMD aluminum capacitors.
The company is developing low profile versions of the niobium-oxide capacitor, and also low ESR solutions based upon multiple anodes, polymer niobium and the combination of multi-anodes and polymer in a niobium-oxide capacitor product. Also, a MIL-Spec version is under development. Areas of current development include the niobiumoxide polymer capacitor which will be called the PolyOxiCapTM, which will have lower ESR characteristics than current models. A high reliability professional grade NbO capacitor will also be developed that will have lower leakage characteristics, and will be able to operate at 150°C environments.
Typical Sample Target Market Analysis for Niobium-Oxide Capacitors
• Game Console Maker
“A”: 16 Polymer Tantalum
and 2 MnO2 Tantalum
• Game Console Maker
“B”: 2 Polymer Tantalum
and 25 MnO2 Tantalum
• Game Console Maker
“C”: 5 Tantalum MnO2
Capacitors, This Product
Will Use NbO Capacitors
• Notebook Computer
Maker “A”: 6 Polymer
Tantalum and 21 MnO2
• Notebook Computer
Maker “B”: 22 Tantalum
Capacitors- All Polymer
• Hard Disc Drive Maker: 6
• SMPS: 2 Tantalum Capacitors
• LCD Monitor: 35 SMD
of which 21 were 5VDC
• Set Top Box: 47 Aluminum
Computers are a product line where components get particularly hot because of tight volumetric efficiency and no room for micro-cooling fans. One method of cooling the notebook is by distributing power supplies throughout the architecture to limit the hot spot areas. Another method is to ensure that components on the board will not fail catastrophically if overheated. AVX has developed the niobium- oxide capacitor solution and the softtermination solution for their ceramic chip capacitor program. AVX predicts that compliance with lead-free and no-smoke legislation should create a forward demand in the electronics industry which is moving rapidly toward safety and affordability in passive component solutions.
Those companies not prepared for this change will lose market share. Another solution is the fused tantalum capacitor, but after a major computer company began to discontinue its use of fused tantalum capacitors because of cost issues, many vendors discontinued its production.
Niobium-Oxide and Tantalum Interchangeability
Some key elements of production for NbO versus Ta Capacitors:
• NbO capacitor and Ta capacitor production processes are
• Production equipment are of the same design, so little
capital equipment costs are required for production of
• However, there can be no cross-contamination of tantalum
and niobium-oxide materals in the manufacturing
Paumanok believes that niobium-oxide capacitor sales will continue to grow because of their non-ignition nature. High layer count multilayered ceramic chip capacitors will also fail if they crack during the PCB flex test due to improper handling during processing. Thus Paumanok believes that niobium-oxide capacitors can be used to replace high capacitance BME ceramic parts in selected applications as well. AVX also notes that niobium-oxide capacitors compete effectively against polymer aluminum capacitors because even though these designs are less likely to burn when compared to tantalum capacitors using manganese cathodes, they still have the capacity to smoke. As legislative requirements begin to kick in over
the next few years, demand will continue to increase for these types of safety and environmental compliant products. AVX is expanding their production capabilities in niobium-oxide capacitors to meet the forecasted demand for these products. It looks like AVX has a winner on their hands.
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