Yageo Corporation (TAIEX: 2327 TW), a Taiwanese corporation that manufactures capacitors, resistors and inductors, and employs 9,400 people worldwide announced consolidated sales results for April 2012.

With consolidated sales reported May 4th, 2012, of NT$2.120MM Yageo experienced a 5.1% decrease in sales month on month from March (NT$2.233MM) and a 14.2% decrease in sales year on year from this time April 2011 (NT$7.695MM YTD vs. $8.964MM).

Reported sales showed increases in NAFTA and Asia Pacific (AP) and decreases in China and Europe.  The Telecom sector reportedly had the greatest appreciable gains in the time period.

Additional resources:

Yageo

Dr. Gerald Paul, Vishay’s President and Chief Executive Officer of Vishay Intertechnology Inc. (VSH), discussed the March 2012 quarterly performance for the Vishay line of passive components, including both the Resistors and Inductors Group and the Capacitors Group in an Earnings Call on May 2, 2012.

According to Dr. Paul “Vishay’s traditional business in the first quarter entered the phase of solid recovery. We enjoy a very strong position in the industrial automotive and military markets and benefit from the strong performance of these segments. Sales in the quarter of $158 million, 14% above prior quarter and 7% below prior year, without acquisitions, 6% above prior quarter and 15% below prior year.

The book-to-bill ratio was 1.13, which improves the backlog to a good level of 3.1 months. The gross margin was at 34% of sales, of the 30% in the prior quarter, driven mainly by higher volumes. Selling prices continue to be fairly stable, minus 0.5% versus prior quarter, minus 0.6% versus prior year. The inventory turns were at quite excellent 4.3.

As I said before, the integration of Huntington and HiRel is well underway. We achieved already in this quarter gross margins of almost 30% of sales with both acquisitions. And the profitability of these two companies is planned to grow further with expanding sales and based on some fixed cost reductions to come.

Coming to capacitors, the business is based on a broad range of technologies with a strong position into European and American market niches. We still suffered from relatively high inventories at distribution largely to perceived shortages in 2011.

Sales in the quarter were $140 million, 4% below prior quarter and 29% below prior year. We’ve seen the book-to-bill ratio of 1.12, which brings backlog up to a good level of 3.6 months. And I think indicates starting recovery also for this product line. The gross margin of capacitors went up to 26% of sales by 4% versus prior quarter due to original product mix.

ASPs were slightly declining in the quarter by 1.2% versus prior quarter by 0.8% versus prior year. We indeed gave back part of the price increases of 2011 in molded tantalum caps accelerating inventory reduction in distribution. In that sense, we believe that this is somewhat was hit, ASP decrease was a temporary one-time effect. The inventory turns of capacitors were 2.9 and we strongly believe that capacitors in the second quarter will follow resistors in terms of recovery.”

For the June 2012 quarter, Dr. Paul forecasted that overall company demand (including both active and passive components) would increase by between 7.6% and 15.1% on a quarter-to-quarter basis, or an average of 11.35%, which will signify a healthy upturn in overall component demand.

Vishay Intertechnology produces all types of capacitors, resistors and inductors as is illustrated in one of their product displays at the Capacitor & Resistor Technology Symposium

Utilizing 3D metal-insulator-metal capacitor structures, CEA-Leti and IPDiA (France) utilized their common lab arrangement to develop a new process based on depositing medium-K dielectrics to achieve capacitance densities of 550nF/mm2.

CEA-Leti and IPDiA were funded under the PRIIM initiative (Platform for the Realization of shared Industrial Innovation) by OSEO to develop a process for increasing capacitance density on 3D structures. Atomic Layer Deposition (ALD) was utilized to achieve conformal coating in high aspect ratio geometries and control thicknesses at the atomic level. A capacitance density of 550nF/mm2 was achieved while keeping leakage and parasitic effects at levels similar to a lower density process previously demonstrated. They unveiled their results at the Device Packaging Conference in Scottsdale/Fountain Hills, Arizona (USA) in March 2012.

PICS (Passive Integration Connecting Substrate) high-density capacitors take advantage of increased surface area in the 3D structure without increasing the footprint of the capacitor. The demonstrated stability with regards to temperature, voltage, and aging in addition to reliability and low ESR/ESL makes the PICS technology an alternative to discrete components – especially in high reliability applications. Applications that can benefit from competitive performance in a smaller volume include: medical, harsh environments, automotive, communications, industrial, defense, and aerospace.

Intrinsic applications that can immediately benefit from these demonstrated improvements include DC/DC converter, IC decoupling, MEMS, integrated sensors, memory sticks, and smartcards. The next steps are to develop the technology for market deployment in next generation 3D products. IPDiA and CEA-Leti are continuing development with PICS as they seek to achieve 1uF/mm2.

Additional Resources:

IPDiA Press Release

CEA-Leti News

OSEO

MedTech Insider

Silicon Semiconductor

Photo Courtesy IPDiA

(Jiangmen, China) Panasonic Electronic Devices (Jiangmen) Company Limited (PEDJM) located in Xinhui, Jiangmen City in Guandong China was seriously damaged on April 29^th 2012 during a storm, (which local news sources described as producing a tornado) which damaged the roof of the factory and caused some of the production lines to stop. No factory personnel were injured in the storm.

The factory is a major global producer of plastic film capacitors, including the following items-

• Standard Metalized Film Capacitors： ECQ-E, ECW-F, ECW-H Series
• Standard Stacked Metalized Film Capacitors： ECQ-V Series
• Noise Suppression Capacitors: ECQ-U, ECQ-J Series
• Dry type AC Film Capacitor (for small type compressors or motors）
• Oil Filled Type AC Film Capacitors（for medium or large compressors, medium or large motors）

A spokesperson for Panasonic interviewed for this story noted that the company immediately began the disaster recovery actions necessary to restart production at the factory right after the damage was realized.  The spokesperson also noted that additional information regarding when full production will be attained will be provided when a final assessment of the damage is completed.  The company also noted that updated lead times for their customers will be published in the near future.  The factory is a key plant supplying the global market with motor capacitors consumed in air conditioner and refrigerator motors, interference suppression capacitors for line voltage equipment, including power supplies and lighting ballasts, and standardized DC film capacitors consumed for power smoothing in consumer audio and video imaging devices.

Information for this story came from a Panasonic Spokesperson and a press release posted on the TTI website.

Introduction and Market Overview:

Value-added and application specific passive electronic components are generally considered high dollar, low volume markets where pricing is secondary to quality. These markets have the highest operating margins and represent the smaller percentage of global passive component sales, accounting for about 13% of global ceramic capacitor revenues in fiscal year 2012. In this article, we take a closer look at ceramic capacitors that are consumed in value-added and application specific market segments in a global basis. Such components are generally consumed in high voltage, high frequency, high temperature or harsh environment applications where their performance is mission critical and there is an expectation on the part of the design engineer that component failure is highly unlikely as long as the components are installed properly and within manufacturer’s guidelines. Key end-markets where value-added and application specific ceramic capacitors are consumed include a myriad of fragmented end-use market segments that can broadly be categorized under the following designations- automotive under-the-hood electronics, specialty power supplies, lighting ballasts, defense electronics, aerospace electronics, medical electronics, instrumentation and control equipment electronics, telecommunications infrastructure equipment, marine electronics, mining electronics, railroad electronics, nuclear power plant electronics and downhole pump and oil & gas equipment electronics.

The new study from Paumanok Publications, Inc., quantifies the world market for specialty ceramic capacitors

High Voltage Ceramic Capacitor Markets: 100 Volts and Above:

High voltage ceramic capacitors are defined as rated 100 Vdc or greater for the purposes of this article.  MLCC are typically applicable to 5 kV, and represent the largest market segment, followed by product markets between 5 and 20 kV, whereby the majority of these applications are almost exclusively single layer discs, or multilayered radial leaded capacitors in design and seldom exceed 20 kV. Ceramic capacitor applications greater than 20 kV are “doorknob” types, otherwise known as valve block designs and maximize out at about 100 kV; however it should be known that applications for capacitors exist in power supplies greater than 100 kV, although these applications are usually satisfied by power film capacitors (polypropylene dielectric).  The majority of specialty power supply applications that require high voltage ceramic capacitors within the definitions described here are for ultimate consumption in the test equipment market, the medical test and scan equipment market, the semiconductor manufacturing equipment market and the defense and aerospace electronics industry.  The defense and aerospace markets are primarily for applications in pulse forming radar, missile power up, satellites and space probes and in various laboratory test environments. Some high volume applications, for larger volume consumption exist in the form of safety capacitors for interference suppression in line voltage equipment (i.e. smoke detectors, fire alarms and lighting ballasts from 50 to 2500 Vac) 630 Vdc tip and ring applications for telecom infrastructure (i.e. in subscriber line interface cards), or in unusual market segments, such as undersea cable transmitters, TV transmitters, and pumped lasers.

High Frequency Ceramic Capacitor Markets- UHF, SHF and EHF:

Paumanok research notes with interest that the majority of product applications for high frequency ceramic capacitors in the Ultra-High, Super-High and Extremely High Frequency range fall into the 1 Ghz to 300+Ghz range, and that the majority of products within this frequency band are defense related; however, commercial applications, including PCN, PCS and 3G and 4D (LTE) wireless networks and wireless CATV applications, and Wireless LAN obviously contribute to a large portion of the marketplace as well. Paumanok also notes a direct correlation between Magnetrons and large revenue centers in the high frequency range for ceramic capacitors, including applications in MRI medical equipment, semiconductor sputtering devices and consumer microwave ovens.  MRI equipment operates from the hundreds of Mhz into the Ghz range.  The MRI trend is that higher frequencies offer better imaging. Paumanok also notes that although defense and aerospace are lumped together because of like performance requirements; that aerospace has a larger number of applications in the high frequency range. It is also obvious however, that telecommunications infrastructure equipment for wireless phones (base stations) is the largest segment historically. In terms of overall consumption of value-added and application specific ceramic capacitors for high frequency applications in 2012, the largest segment will be for high frequency base station applications for both commercial and defense market segments; followed by medical test and scan equipment, including MRi and related scanning devices; defense communications for concentric warfare and related applications; and RF sputtering devices for semiconductor manufacturing, high frequency lasers and related industrial and laboratory test and measurement equipment. The majority of demand for high frequency ceramic capacitors in the UHF, SHF and EHF bands are for multilayered chip or multilayered radial leaded designs. The remainder are for single layered ceramic capacitor designs.  It is extremely important to note that the single layered designs, have been developed because they extend into frequency ranges that are currently unattainable by multilayered designs (primarily into the EHF and millimeter wave bands. Key performance types consumed in this segment include NPO dielectrics, X7R dielectrics, low loss porcelain dielectrics and some Z5U dielectric designs.

High Temperature Ceramic Capacitor Applications: >125 Degrees C:

The majority of all applications for high temperature ceramic capacitors are for under-the-hood automotive applications.  Which would include all class 3 to 8 on-road and off-road vehicles, although these usually max out at 150 degree C operational environments, with 175 degree C now in experimental stage.  The specialty markets that exist for very high temperature capacitor applications go to 300 degrees C (and in some instances even higher) and are usually reserved for applications in rocket motors and satellites, as well as high speed aircraft, down hole pump markets, geothermal electronics, and laboratory and some furnace applications. Automotive under-the-hood ceramic capacitors are almost all surface mount chips with respect to configuration and usually are in the X7R or X8R dielectric, depending upon the temperature requirement. For specialty high temperature applications, more radial leaded ceramic capacitor designs are thought to be sold in this segment of the marketplace, especially for sensor assemblies due to the high voltage handling capability of the radial leaded designs; but also there is increased demand for the large case size chips used in power supply assemblies for the same aerospace, oil well service and mining electronics applications. Both are good markets, but chips are limited in their voltage handling capability.

Ceramic Safety Capacitors (X & Y Capacitors):

Ceramic safety capacitors are consumed in line voltage equipment, with emphasus upon power supplies, lighting ballasts, smoke detectors and other electrical devices connected to line voltage and this market is well contested between multilayered and single layered ceramic capacitors, as well as plastic film capacitors.  Many of the single layered ceramic capacitors consumed in this segment are in the 250 Vdc range, although products exist up to 3150 Vdc and above (we note some X and Y Capacitors in the 6 kV range for example).  Ceramic capacitors consumed as X and Y safety capacitors and for applications as circuit protection devices with emphasis upon providing interference suppression in accordance with international standards and regulations governing noise generation in hardwired devices. Safety capacitors are in fact highly regulated products that must adhere to consumer regulations established by UL, CSA, VDE, IEC and other regulatory bodies.  Plastic film capacitors dominate the global market for interference suppression capacitors, but ceramic capacitors are consistently encroaching upon plastic film capacitors in this application because of their lower cost and greater volumetric efficiency.

Technical Variations Of Specialty Ceramic Capacitors:

In addition to the ceramic capacitor configurations and variations on types of dielectrics employed in value-added and application specific ceramic capacitors, there are also technical variations that can be found in the specialty segment of the market.  These include flexible termination and open mode type MLCC; as well as derivative terminations and arc-over body sprays.

• Flex Robust Terminations and Open Mode MLCC:
• Flexible termination and open mode type MLCC, which are basically designed to prevent ceramic body cracking during PCB flex tests, have made significant inroads into the specialty ceramic capacitor markets, and are now making inroads into the mass commercial markets. According to primary vendors, it is apparent that the entire large case size MLCC markets may move in the direction of having flexible terminations, just simply because the evidence of their superior performance is apparent; however, as an automotive vendor noted- there is a real push back on having to pay a premium to get this technology.  Regardless, the number of vendors now supplying MLCC with flexible terminations based upon polymer (instead of the traditional precious or base metal) is increasing and includes ten of the top ceramic capacitor manufacturers in the world. The majority of chips that have these flexible terminations include X7R and NPO types; although there is clear movement to include X8R and Y5V products as well.  The major consumers for this technology are the automotive manufacturers, who have a stringent flex test due to the vibration frequencies in an automobile and in the DC/DC converter and lighting ballast business where large case size chips are consumed for X and Y safety circuits.  An open-mode MLCC is designed to accomplish the same thing as a flexible termination MLCC, insomuch as the MLCC with an open-mode design can pass the flex termination and will also still operate if the MLCC cracks.  The design of the “open-mode” MLCC is one where the internal electrodes do not reach to the end of the capacitor body, but are set back to a certain degree so that if the MLCC does crack, it will not separate the electrodes from the capacitor body.
• PGM Derivative Terminations:
• Some specialty vendors of MLCC offer derivative terminations manufactured from platinum group metals (PGM), other than the traditional palladium + silver, including gold and platinum bearing terminations. The majority of alternative termination materials are consumed for specialty defense applications, medical applications, oilwell electronics and some minor industrial electronic applications because specifications require that the derivative terminations be employed. There are now eight vendors in the world that carry specialty terminations for MLCC, and these are primarily gold terminations or platinum terminations, with various blends of different PGM metals also available.
• MLCC With Arc-Over Protection:
• One of the newest technical variations being presented to ceramic capacitor customers is the MLCC with Arc-Over protection. In many high voltage applications, the possibility of an arc-over event that may cause the capacitor fail is evident.  Now ceramic capacitors being offered in the USA and in China have arc-over protection, which is either achieved through the application of an arc prevention coating, or through the manipulation of the internal structure of the MLCC. The addition of an arc-over solution, especially in high voltage and large case size MLCC, may do away with the need for an epoxy coating that is found I traditional MLCC.  We note that in many instances, high voltage large case size MLCC are now being produced that have both flexible terminations and arc-over protection, which in effect creates a more robust capacitor design, able to withstand the rigors of high voltage circuits In harsh environments.

Summary and Conclusion:

Many ceramic capacitor manufacturers today have distance themselves from the price sensitive mass commercial MLCC markets in wireless handsets, computers and TV sets and have focused instead on the niche markets where premiums remain high and price is secondary to quality.  This represents only about 13% of the market in terms of dollar value, but the premiums in these specialty segments remain high enough for many of the smaller vendors to remain profitable, even in hard economic times.  End-use market segments that are considered specialty include under-the-hood applications in automotive environments; defense and aerospace electronics, medical electronics, various aspects of the oil and gas services and prospecting industries, marine electronics, mining electronics, electric transport and other niche segments. Ceramic capacitors consumed in these harsh environments are different than traditional components with respect to the voltages, frequencies and temperatures at which they operate. Technical variations, including different dielectrics, configurations, terminations and additional differentiation is required to succeed and thrive in the space. Paumanok Publications, Inc. has determined the specialty segment, known as value-added and application specific, is a growth market for the future, for those who have the technical aptitude to compete effectively in the space. Key areas of market growth for value-added and application specific ceramic capacitors between 2012 and 2017 according to the new market study from Paumanok Publications, Inc. entitled “Value-Added & Application Specific Ceramic Capacitors: Global Market Forecasts: 2012-2017 ISBN # 1-893211-90-8 (2012)“ include 1) downhole pump applications for oilwells, 2) wireless access, 3) medical implant, 4) medical test and scan, 5) automotive under the hood, 6) defense electronics (UAV, UGV), and many others.

This story addresses important market trends impacting the global demand for metal oxide varistors, which are key components used to protect sensitive electronic products from the impacts of electrical transients…

Introduction To Varistors:A varistor is an electronic component with a significant non-ohmic current-voltage characteristic. A varistor is also known as Voltage Dependent Resistor or VDR and therefore varistors are considered a sub-set of the variable resistor component segment, and are also likewise considered to be part of the overvoltage protection component market segment as well.

Application of Varistors:Varistors are often used to protect circuits against excessive transient voltages by incorporating them into the circuit in such a way that, when triggered, they will shunt the current created by the excessive voltage away from the sensitive components. Multilayered chip type varistors are physically small, and mirror the EIA (US) and EIAJ (Japan) accepted ultra-small case sizes consumed in digital electronic circuits for ESD (Electrostatic Discharge) protection. Larger configuration disc type varistors (pressed pill technology) are older, legacy type components that are used to protect sensitive line voltage equipment connected to AC power lines.

Construction of Varistors:Varistors are ceramic in nature, and are created from ceramic slurry composed of zinc oxide and specific additives (such as Bismuth).  Multilayered chip varistors are produced in the same manner as multilayered ceramic chip capacitors, whereby ceramic slurry is screened through a Doctor Blade, and then electrode materials composed of precious metals (palladium + silver or in some instances- platinum) are applied to each consecutive layer of ceramic “green tape.”  The finished, stacked construction is then fired in either a batch or tunnel kiln, dried and then separated into the desired case size.  The finished chips are then “terminated” with siver paste materials.  Disc varistors are typically radial leaded in nature, whereby the ceramic powder mixture is compressed into a pill or “disc shape, sprayed with silver conductive materials, and then encapsulated in polymer materials.

Chip and Disc Varistor Configurations and Variations: As noted, Metal Oxide Varistors are produced in two primary configurations- chip and disc.  Disc varistors have been around for 45 years (legacy components), while chip varistors are newer, and have been available for about 20 years.  Varistor construction methods are similar to ceramic capacitor production methods for both disc and chip versions. Chip varistors have also evolved into array designed (primarily quad packs- four varistors in an 0603 or 0805 package), while disc varistors have evolved into large industrial block designs.  Since varistors are in fact non-linear resistors, their physical size determines how much energy they can absorb, thus raw material consumption becomes an important part of the cost of goods sold.  Also, redundant solutions are employed to gradually dissipate excessive voltage.

Relationship Between Varistor Configuration and End-Use Market Segment: Varistors are segmented into digital electronic markets and industrial or line voltage markets. Chip varistors, especially multilayered designs, employ precious metal electrodes, with emphasis upon palladium-silver (Pd + Ag) electrodes, although Paumanok has noted the use of platinum (pt) electrodes in the past in this market, the top competitors now employ a palladium+silver electrode system. The market for varistors has grown substantially because of their use in wireless handsets for IEC 61000-4-2 compliance, which is a European standard for protection against electro-static discharge (ESD).  Chip varistors are also used in automotive electronic subassemblies to protect engine control units and other sensitive subassemblies against the affects of transients.

Competition With Other Overvoltage Protection Components:Varistors compete against TVS (transient voltage surge) diodes directly, but have made inroads in wireless communications devices and automotive electronic subassemblies because of their volumetric efficiency (small case size parts, which are important for handset use), and because of their robust nature in harsh automotive environments.  Although some varistors are used in the personal computer markets in Taiwan and China, we note that semiconductor devices such as zener diodes and avalanche TVS diodes are used in larger volumes for IEC-61000 4-2 compliance.  Additional competition comes from the relatively new surge polymer materials, which are cost competitive against varistors, and have better performance with respect to lower equivalent series inductance.  Polymer surge protection materials are an offshoot of polymer PTC technology which is used for overcurrent protection.

Important Market Trends Impacting Varistors: 2012-2016

Pricing Trends And Future Price Stability: According to the recently released market study from Paumanok Publications, Inc. entitled ” Metal Oxide Varistors: World Markets, Technologies & Opportunities: 2012-2016″ price erosion is a key threat to the global circuit protection markets.  The constant downward pressure on price for all components is a major issue; and impedes profit margins, which in turn impedes growth capacity additions and expansions.  This is most true in the mass produced products for ESD protection- including both chip varistors and TVS diodes.  Price erosion is also a function of increasing competition, especially in high unit growth segments such as varistors and other ESD protection components; as well as more vendors entering the markets, especially in the Chinese region.  The problem with continued price erosion in the markets is the ever-looming prospect of higher raw material costs for precious metals, base metals and rare earth additives (includng zinc oxide, silver and palladium) which are consumed in the construction of varistors.

Varistor Co-firing with Ceramic Capacitors: Metal Oxide Varistors manufactured from zinc oxide ceramic materials have been demonstrated by such companies as EPCOS (now DBA TDK-EPC) to be co-fireable with MLCC materials made from barium titante materials (bariun carbonate combined with titanium oxide).  The target market for this capacitor, ESD protection component was the input lines for engine controllers used under-the-hood in advanced automobile applications.

Electronic Circuit Protection Component Future Integration In LTCC & FR4 Modules- It is important to note the trend in modularization for applications in wireless communications devices and automotive electronic control units that should impact circuit protection components.  This trend is already a $1 billion industry for LTCC (low-temperature co-fired ceramics) and FR4 modules, which are used as power amplifiers, front-end transmitters, and Bluetooth Antenna modules in cell phones, and as engine control units in automobiles. Major producers of LTCC components and modules include Murata, TDK, Kyocera, EPCOS, Taiyo Yuden, C-Mac Scrantom, National Semiconductor LTCC Operations, CTSWireless, and Robert Bosch (captive) in automotive.  In FR4 modules the major suppliers to the wireless industry are RF Micro Devices and Skyworks. LTCC modules and FR4 modules offer the wireless designer greater flexibility, as well as increasing throughput of manufacturing by buying complete circuit modules ready to place in the printed circuit board.  Both LTCC module and FR4 module producers are driving demand for the new 0201 case size capacitors and resistors at this time so they can create increasingly smaller modules.LTCC modules lend themselves more toward electronic circuit protection integration because of the ceramic nature of the substrate (mostly electronic glass mixed with ceramic), which welcomes similar ceramic technologies, such as varistors and ceramic PTC thermistors for overvoltage and overcurrent attributes added to the LTCC module.  This would be applicable in both wireless and automotive subassemblies.  The ceramic materials used in varistors and ceramic PTC for example can be co-fired with the LTCC tape.  Major LTCC suppliers with knowledge of circuit protection have suggested manufacturing the entire subscriber line interface card used in telecom infrastructure switches using LTCC. Modularization trends in wireless and automotive will begin to have a greater impact on the varistor markets in the next few years.  Companies that are well positioned to take advantage of this are TDK-EPCOS, CTS Wireless, Kyocera, TDK and Murata who are involved in both LTCC module assemblies and also product circuit protection component devices. With respect to zinc-oxide varistor materials, they have been proven to be co-fireable with ceramics and therefore readily lend themselves to the LTCC process.

Strategic Acquisitions Affecting Global Market Share: There have been some significant acquisitions in the global electronic circuit protection industry that have affected global market shares in the sector over the past ten years- these include:

• TDK’s Purchase of EPCOS: TDK’s merger with EPCOS has cerated the largest passive component company in the world for 2011.  The combined positioning in circuit protection components should not be underestimated.  The company now has achived major share in metal oxide varistor and NTC thermistor products.
• Littelfuse’s Purchase of Harris Suprression Products Division: Littelfuse’s entry into the global varistor market was through the purchase of Harris Semiconductors- Suppression Products Division many years ago.
• Vishay’s Purchase of BCComponents: Vishay Intertechnology effectively extended their circuit protection product portfolio in 2003 through their purchase of Bccomponents, which are the former operations of Philips Passive Components.  Philips sold the business to Compass, a private investment firm in 1999, and Vishay bought the assets for them.  BCC included aluminum electrolytic capacitors, DC film capacitors, nickel-chromium resistors and non-linear resistors.  The non-linear resistor business which is located in Evere, Belgium is the most important part of the purchase as it related to this report.  The Evere plant (which had between $40 and $50 million in sales by itself) produces ceramic NTC and PTC thermistors as well as metal oxide varistors and humidity sensors.  This complimented Vishay’s current business as their Dale facilities in Nebraska and in Israel, which produce ceramic PTC and NTC thermistors already.  The combination of the varistor technology from the BCC Evere plant with the multilayered technology at Vishay-Vitramon may give Vishay an excellent platform for growth in the varistor markets, especially in their automotive accounts.

Raw Material Usage and Supply Issues: Paumanok notes that many suppliers of electronic circuit protection components are still endeared to the use of specific precious metals in the construction of these devices.  The most notable continued usage trend is in the use of palladium metal in multilayered varistor electrodes and in surge resistor pastes for line feed resistors. Manufacturers of MLVs and LFRs argue that palladium costs are not a major factor, but these similar manufacturers have transitioned away from palladium in favor of nickel in their ceramic capacitor businesses, so cost here is a factor. The price of palladium has been volatile over time. Over time we expect greater interest in base metal electrodes and base metal surge resistive pastes to help maintain profit margins in the face of inevitable long-term price erosion. Other raw materials that cause us concern include zinc, used in varistors.  The reader should appreciate that metal oxide varistors are created through the combination of zinc oxide ceramic materials and palladium- silver metallization.  This unique combination to volatile materials make varistors susceptible the price fluctuations due to raw nmaterial supply chian instability.

Value-Added & Application Specific Varistor Markets: As more commercial electronic subassembly production moves to Asia (with emphasis upon China), component vendors are now re-evaluating their markets in the United States, Western Europe and Japan to determine what will be left behind, and either organically tool their existing brick and mortar structures in these regions to sell to the markets that remain, or simply relocate production to China to take advantage of low production costs and the growing domestic markets in China.  Many companies with large sales volumes are of course doing both, especially if they are already global in nature. It is the general consensus that the American, Western European and Japanese markets will be smaller in value in the future (the near future as is evident already), but will be more profitable because the customers that remain will be producing value-added and application specific electronic subassemblies that have substantial profit margins and are not subject to moving to China (maybe to Mexico but not China). Product lines that are expected to remain in the USA, Western Europe and Japan include telecommunications infrastructure equipment, automotive electronic subassemblies, line voltage equipment (lighting ballasts, DC/DC converters, alarm systems), large home appliances, defense electronics, medical electronics, downhole pump electronics, mining electronics, high-end industrial electronics (motor controllers, variable speed drives) and instrumentation and control equipment.  Mass commercial products such as consumer audio and video imaging equipment, wireless handsets, personal computers and laptop computers, small home appliances and switch-mode power supplies will continue their mass movement away from the USA, Western Europe and Japan, primarily to China, but also to India, Korea, Vietnam, Philippines, and Thailand, and parts of Eastern Europe. In the instance of varistors, the market entry point is in high voltage applications, where disc varistors are the product of choice for circuit protection.  Many high voltage applications exist in defense electronics, power supplies and medical test and scan equipment worldwide. This is an important shift that must be contended with by major vendors of circuit protection components as the shift develops.  Certain companies have positioned themselves either organically or through acquisition to take advantage of these changes.  Value-added components require further testing, but have greater profit margins.  In many instances value-added testing requires greater capital investment but the testing can be applicable to multiple markets.  Such value-added testing would include heat, vibration, pressure, and corrosion resistance. In circuit protection of course there are added strenuous tests required to help subassembly manufacturers comply with Telcordia (Bellcore), UL, TUV and IEC requirements for surge protection. What readers of this report who are already involved in electronic circuit protection component markets, they must understand that other passive component vendors in the capacitor, resistor and inductor sectors are looking at circuit protection as one of the best opportunities for combining excellent profit margins with relatively high operating profit margins.  So Paumanok predicts there will be increased activity in mergers and acquisitions between traditional capacitor, resistor and inductor manufacturers and electronic circuit protection component manufacturers over time.

The Mass Movement To China: As we have noted in the previous paragraph, there is a mass movement of consumer related electronic subassemblies to South East Asia, with emphasis upon China. Paumanok now estimates that China will consume 35 to 40% of all electronic circuit protection components produced in the digital electronic sector in the Asian region in 2011.  Massive local production of wireless handsets, personal computers, laptop computers and consumer audio and video imaging products will continue to grow in China.  This will be led by increased Chinese production by the top contract electronic manufacturers (Solectron, SCI/Sanmina, Celestica, Acer, Flextronics) as they continue to look for ways to increase their profit margins.  Other brandname companies will continue to put assets in China, and there will also be domestic growth of indigenous Chinese customers (such as Huewei and Legend Computer). Large-scale electronic circuit protection component vendors have already identified this trend and have placed production facilities in either Taiwan or Mainland China or both.  Such companies include Littelfuse, TDK-EPCOS, Murata, Panasonic, Kyocera/AVX, and Vishay.

Key Growth Markets & Strategies For Component Vendors: Global markets that will continue to be stable for producers of electronic circuit protection components will be in the automotive electronic subassemblies markets, the large and small home appliance markets, and the line voltage equipment markets (with emphasis upon lighting ballasts, alarm systems, and switchmode power supplies).  Faster growth markets will continue to be in wireless communications devices as functionality increases and greater protection against ESD requires more circuit protection components per phone.  Additional rapid growth markets include flat panel displays, cable and ADSL modems (which have an interesting technical barrier for circuit protection as many circuit protection components have inherent inductance and capacitance which interferes with video signals).  Other fast growth markets will include the smaller DC/DC converter business (bricks), and of course the emerging telecommunications infrastructure markets for subscriber line interface card protection and cellular base station protection. Medical electronics will also continue to grow for applications in both medical test and scan markets (i.e. GE, Philips, Hitachi) and in medical implants (i.e. Medtronics, Guidant and St. Judes).  And defense electronics markets and aerospace markets will continue to grow for applications in avionics and in missile power up and guidance systems.  Other value-added growth markets will be in mining electronics and downhole pump electronics (especially for temperature probes employing NTC and/or PTC thermistors. Defense electronics is also a growth area as is its sister markets in aerospace engineering.  Defense markets will grow as global armies require less human interaction- to be replaced by more sophisticated electronic platforms ans solutions (UAV, UGV). Oilwell serviecs and mining service electronics are also key growth areas, as are class 7 and 8 offroad trucks.  More oil will be required and exploration electronics will key to that and to getting the most out of each well.  Mining electronics will boom as more rare earths are required to run electronics industries and metal industries in the face of increasingly tighter restrictions on Chinese exports.

Movements to Smart Grids and Renewable Energy Systems: Major Impact- The other key areas for growth will be in power transmission and distribution electronics for creation of smart grid technology worldwide.  This will have major positive impacts on thyristors, snubber capacitors, disc varistors, gas discharge tubes and especially industrial grade fuses.  Also, the augmentation of renewable energy systems, such as solar, wind and wave generation equipment also pose new and exciting challenges for circuit protection companies worldwide.  It is obvious from all major vendor’s websites and press releases that this is the key direction for many players.

Movement to USB 3.0: Major Impact- Another critical area of great growth in units will be in the transition to USB 3.0 ports from USB 2.0 ports.  The increased data rate  protocol as well as its backward compatability with USB 2.0 crates a more robust and better product, especially for transferring large data files in seconds.  We estimate that this will affect up to 2.8 billion USB devices wordwide (actually a small number compared to the number of circuit protection components on the market, but a nice overall bump for specific products- such as varistors, TVS diodes and polymer PTC thermistors. Electro-Static Discharge is a more pronounced threat to USB 3.0 ports. USB 3.0 has four additional data lines of high speed copper (5 Gbps) as well as the two original USB 2.0 data lines (480 Mbps). Also there is a higher current output available with USB 3.0 (up from .5A to .9A) requires more robust circuit protection components. Capacitance is key consideration for the new 3.0 USB and their circuit protection solution. Capacitance is ‘parasitic’ when the component is being used for protection of data lines and its capacitance degrades the integrity of the signal being sent. Therefore capacitance must be minimized while still maximizing the circuit protection function of the component. Based upon these specific requirements, we believe that varistors, TVS diodes and polymer PTC thermistors in sirface mount configurations (ultra-small case sizes) will be the products that will benefit the most from this transition.

Emerging Economies: Major Impact on Varistor Markets: The following list of countries illustrates the top “Emerging Economies” in the world today by ranking in terms of foreign direct investment according to the International Mnetary Fund.

1. China

2. India

3. Russia

4. Brazil

5. Mexico

6. Korea ROK

7. Indonesia

8. Turkey

9. Taiwan ROC

10. Poland

11. Thailand

12. South Africa

13. Egypt

14. Columbia

15. Malaysia

The reader will note that the key emerging economies in the Asia-Pacific ARegion include China, India, Korea, Indonesia, Taiwan, Thailand and Malaysia; while the key emerging economies in the Americas include Brazil, Mexico, and Columbia; and the key emerging economies in Europe include Russia, Turkey and Poland. Based upon current market data associated with varistor consumption, Paumanok estimates that emerging economies accounted for 34% of total varistor consumption in 2011, while established economies accounted for 66%.  Over the next five years we expect fuse demand in emerging economies to grow by 6.2% on an average annual basis, while varistor demand in established economies should grow by about 4% per year.

For further reading:

1) ” Metal Oxide Varistors: World Markets, Technologies & Opportunities: 2012-2016″

©2012 All Rights Reserved.  No Part of This Story Can Be Reproduced Without The Express Consent of The Publisher- Passive Component Industry Magazine LLC

The following table illustrates all the new tantalum deposits that have been identified in the world over the past two years, including those that have been previously identified in preceding years. What this table illustrates is that as tantalum raw material prices increased, the amount of prospecting for the metal also increased.  This is one of the key findings of the newly released report entitled “Tantalum: World Market Outlook: 2012-2017.“

SUMMARY TABLE:  LIST OF KNOWN TANTALUM DEPOSITS WORLDWIDE 2012

Source: Compiled by Paumanok From Published Reports- Part Two, Next Page…

Owner of The Deposit (Part Two)	Deposit Name	Deposit Location	Estimated Quantity of Tantalum	Notes
MDN, Inc. (MDN)	Crevier Property	Girardville, Quebec Lac-St. Jean, CANADA	Unknown	72.5% Owned by MDN, and 27.5% owned by IAMGOLD
Monarques Resources	Arques Property	Nemaska,, Quebec, CANADA	Unknown	Tantalum, Niobium and Rare Earth Elements
Nuinsco Resources (TSX:NWI)	Prairie Lake, Ontario	Prairie Lake, Ontario, CANADA	Unknown	This is a uranium and niobium deposit, tantalum is present
Pacific Wildcat Resources (TSX: PAW)	Muiane Tantalum Project	Alto Ligonha pegmatite belt, MOZAMBIQUE	750,000 pounds Ta205	Primarily a tantalum resource
Pacific Wildcat Resources (TSX: PAW)	Mrima hill	Mombasa, KENYA	unknown	Primarily a Niobium resource , Some Tantalum
Peak Resources (ASX:PEK)	JORC Resource/Ngualia RE Project	Southern Tanzania, TANZANIA	137 ppm of Ta205	Niobium and Tantalum discovered through drilling
RAM Resources (ASX:RMR)	Motzfeldt Project	Near Narsaruaq, GREENLAND	403ppm tantalum	SGS Mineral Services Doing the Assessment
RAM Resources (ASX:RMR)	Drysdale Prospect	Aries, GREENLAND	830 PPM of TA205	This is a high concentration of Ta205
REE International (Pink;REEI)	Santa Cruz property	Santa Cruz, VENEZUELA	Unknown	They said they were about to begin selling Ta205 in January 2012
REE International (Pink;REEI)	Bolivia	BOLIVIA	Unknown	This was noted in the Citation 29
Solid Resources Ltd. (TSX-V: SRW)	Alberta-1(Doade-Presqueiras)	North-western SPAIN	Unknown	SGS United Kingdom Feasibility Study
Tertiary Minerals ( LON:TYM )	Rosendale Tantalum Project	Kemiö Island, FINLAND	255ppm Ta2O5	Waiting for the right time to mine the  material
Tertiary Minerals ( LON:TYM )	Ghurayyah Tantalum Project	Ghurayyah, SAUDI ARABIA	284 ppm ?	AH Algosaibi Bros Co and Al Nahla Trading & Contracting Co (Partner)
Texas Rare Earth Resources	Round Top Mountain Project	Hudspeth County, Texas, USA	<0.046% Tantalum	Heavy rare earth elements, niobium, tantalum, gallium
TNR Gold Corp. (TNR)	Mavis Lake Project	Dryden, Ontario, CANADA	170 PPM TTa205	Mn-tantalite, Mn-columbite and wodginite group
University of New Mexico	Harding Pegmatite Mine	Dixon, New Mexico, USA	Not mined since the 1940′s	Donated to the Earth and Planetary Sciences department in 1978 by Dr. Art Montgomery,
Unknown	Kougarok prospect	Seward Peninsula in Alaska, USA	Unknown	Tantalum resources in a lithium-fluorine granite
Unknown	Caicara Tantalum Project	Rio Grande De Norte, BRAZIL	157,000 Pounds of tantalite	Ouro Preto and Trigueiro tantalite deposits
Unknown	McAllister Resource	McAllister, Alabama USA	1.2 MM Pounds Estimated	This resource is for sale in 2012. Part of the deposit is under the state highway.

Source: Compiled by Paumanok From Published Reports- This table includes only tantalum deposits.  None of these deposits have been converted into working mines. This table is from the market research report entitled “Tantalum: World Market Outlook: 2012-2017″

Tantalum being processed into capacitors

which was published by Paumanok Publications, Inc.  No part of this story may be published without the express consent of the publisher ©2012 Passive Component Industry Magazine LLC.

This new market, technologies & opportunities report from Paumanok Publications, Inc. is an update to the popular 2005 title. This study provides an in-depth analysis of value-added and application specific ceramic capacitor world markets, including high voltage ceramic capacitors >500 Vdc,, high frequency ceramic capacitors > 1 Ghz, high temperature ceramic capacitors >200 Degrees C; Ceramic feed thru capacitors; Ceramic safety capacitors (X&Y) and automotive under-the-hood ceramic capacitors for applications between 125 degrees C and 175 degrees C for applications in specialty segments of the power conversion, telecom infrastructure, medical test & scan, medical implant, defense, lighting and automotive market segments. REASON FOR THE REPORT: As mass produced ceramic capacitor products move to low-cost manufacturing regions, ceramic capacitor manufacturers in Japan, the United States and Western Europe must re-evaluate their existing production facilities in high-cost regions, and reposition their product portfolios to address markets that will most probably stay localized. The majority of these markets require value-added and application-specific ceramic capacitors that address high voltage, high frequency and/or high temperature and harsh environment requirements. This market study sheds light on the fragmented, low volume, high value, highly profitable portion of the global ceramic capacitor industry. BENEFITS OF THE REPORT: This report gives detailed intelligence data on the specialty segment of the global ceramic capacitor market, where operating margins are the highest and where price is secondary to component quality and performance. As the low picofarad MLCC markets become inundated with suppliers, companies with smaller economies of scale must refocus all or part of their product portfolio. This new focus should include application specific ceramic capacitors to increase profit margins and delay the continued price erosion in their overall ceramic capacitor product offering. This analysis sheds light on the fragmented, diverse, but highly profitable segment of the global ceramic capacitor industry. PRODUCT FOCUS OF THE REPORT: • High voltage ceramic capacitors- >500 VDC • High frequency ceramic capacitors > 1GHz • High temperature ceramic capacitors> 200 Degrees C • Ceramic feedthru ceramic capacitors • Ceramic safety capacitors (X&Y) • Automotive Under-The-Hood Capacitors 125 to 175 Degrees C END-MARKET AND CUSTOMER SEGMENT ANALYSIS: • Power Supplies • Defense Electronics • Medical Test & Scan • Medical Implants • Wireless Base Stations • Defense Communications • Semiconductor Mfg. Equipment • Oilwell & Mining Electronics • Lab Test & Measurement Equipment • Undersea Cable Repeaters • Automotive Under-The Hood • Lighting Ballasts.  Value-Added & Application Specific Ceramic Capacitors: World Markets, Technologies & Opportunities: 2012-2017 ISBN # 1-893211-90-8 (2012)

In February, 2012, Matamec and Toyota signed an MOU to do due diligence and feasibility studies for a joint venture for mining heavy rare earth materials in Quebec at the Kipawa deposit (1,000 hectares) on the Zeus property (17,678 hectares).  In December of 2011, Matamec (Canada) [TSX-V:MAT and MHREF] announced the early stages of the partnership with Toyota Tsusho Corporation (Japan) [8015:TTC].  Specific minerals of interest include yttrium-zirconium-niobium-tantalum and could potentially include gold, base metals and platinum group metals.

In response to China’s dominance in mining rare earth minerals combined with its ability to impact raw materials prices by reducing exports, companies and countries have aggressively been seeking alternative supplies and substitutes.  Rare earth materials are used for many of the things that generate and consume energy. Thus, increased prices in rare earth materials are cause concern for leaders of nations given the potential ripple effects of reduced supply.   In fact, the United States, the EU and Japan have gone so far as to complain to China about their policies of restricting export of the raw materials needed around the globe.   China provided its justification for the quotas.

Toyota has committed over $1.5 million (Canadian) for exploration of the Kipawa deposit. A June 27, 2012 deadline is in place to determine whether or not Toyota and Matamec will join in a formal joint-venture to pursue additional exploration and mining. $316 million (Canadian) is expected to be needed to complete the exploration and mining effort. With proprietary processing technology, Matamec could potentially be producing as early as second quarter 2016.

Read more:

TANTALUM: World Market Outlook: 2012-2017

Matamec Explorations Inc – Preliminary Economic Assessment (PEA)

Toyota Tsusho Corporation

The Gold Report

MineWeb

Montreal Gazette

Laser Tek Taiwan Co. Ltd (Chairman Gary Cheng) supplies materials and equipment (including laser trimmers and cutting machines) used in the production of chip resistors.  With increasing demand for miniaturized package sizes (0201 and 01005) in smartphones and tablets and the associated increase in demand for functionality in these devices, Laser Tek is well positioned to provide needed technology and grow their sales for the year.

Sales growth for Laser Tek is expected to be on the order of 20% as chip resistor companies increase production to meet increasing demand.  Laser Tek supplies equipment to companies in Japan, Korea and China.  Laser Tek also supplies SMD Packaging Materials, SMT Equipment, Laser Equipment, LED Tapping machine, IS services and LED Lamps.

Related resources:

Reuters

Bloomberg BusinessWeek

Laser Tek – Taiwan

Laser Tek – Singapore

DigiTimes

Research In China

Note: Image from Laser Tek website