In 2018, the global component market continued to face rising prices, especially for passive components like resistors and capacitors. On March 2nd, Murata, a leading manufacturer of MLCCs (Multilayer Ceramic Capacitors), announced a 50% reduction in production capacity for its older product lines, which have already been replaced by miniaturized alternatives. This move was partly due to factory shutdowns caused by severe snowstorms in Japan’s Honshu Island. The company also raised prices on certain products, while Kyocera suspended some operations, creating further supply constraints. As a result, the MLCC market saw significant stock price increases, benefiting major manufacturers.
The price hikes spread beyond MLCCs into other passive components such as inductors and capacitors, with some products seeing price increases of up to 30%. South Korean giant Samsung was among the first to implement new price hikes. Despite efforts to expand production, the industry still faces a supply-demand imbalance, with demand outpacing capacity. Analysts expect prices to remain high through the second quarter of 2018.
MLCC shortages had persisted for over 15 months, and although expansion plans were initiated in 2017, bottlenecks in the manufacturing process—such as layering and sintering—delayed the release of new capacity until late 2018. With production delays and limited availability, many manufacturers reported orders extending well into 2018, keeping prices elevated. The balance between supply and demand is expected to stabilize only by mid-2019 or early 2020.
In addition to MLCCs, resistor prices have also surged. Major chip resistor producers, including Fenghua Hi-Tech, have repeatedly raised prices. In China, national giants increased resistor prices twice this year, while Wuxi Taiming Electronics adjusted thick film resistor prices, with some packaged resistors rising by 15%. Market research firm Paumanok predicts that global demand for passive components will reach $28.6 billion by 2020.
From October 2017, MLCC prices rose by 10–110%, depending on the model. By 2018, general-purpose MLCCs like 0201/0402 saw price increases of two to four times. Global MLCC production in 2017 reached 411.25 billion units, with demand hitting 420 billion. By 2018, demand was even higher at 440 billion, highlighting the ongoing tightness in the market.
With many manufacturers’ orders reaching beyond September 2018, prices are expected to stay high. Although new capacity will gradually come online, it will take time to meet demand, and the supply-demand gap is likely to persist into 2019.
Passive components, including resistors, are expected to continue their price increase trend into the third quarter of 2018. The MLCC market, in particular, has a demand gap exceeding 20%, and prices are expected to remain elevated until the end of the year.
Following Murata’s announcement of production cuts and price increases, downstream customers rushed to stock up, triggering a surge in orders for major chip resistor manufacturers. Chip resistors have faced rising material costs, exchange rate fluctuations, and labor expenses, all contributing to upward price pressure.
Japanese plants are less efficient than their Taiwanese counterparts, prompting a shift in production toward the automotive sector. Additionally, about 5–7% of other manufacturers are moving production to automotive applications, exacerbating supply chain pressures. Without new capacity, the chip resistor market is expected to face even tighter conditions after the second quarter.
Despite the relatively simpler manufacturing process compared to MLCCs, chip resistors can be produced more quickly. However, this also means that supply can fluctuate rapidly. With Japanese companies shifting capacity to automotive use, and others following suit, the shortage may worsen if demand continues to grow.
Safety stock levels for chip resistors are declining, with major players like China’s National Giant and Mong Kwan holding less than 30 days of inventory. Industry averages hover around 50 days, but with demand surging, stock levels are expected to drop sharply after March. The complexity of resistor parameters and product types also makes material management challenging for EMS providers.
Taiwanese companies dominate the chip resistor market, accounting for 60–70% of the global share. While major players like Rohm, Vishay, KOA, and Panasonic have substantial capacity, Samsung has not significantly entered the resistor market. With no new upstream ceramic substrate capacity coming online, concerns about supply shortages are growing.
Price increases in the semiconductor industry stem from several factors: rising raw material and labor costs, increasing demand in consumer electronics and automotive sectors, and cautious production expansion by key manufacturers. Historically, similar price surges occurred in 2000 and 2010, lasting about one to two years.
On the demand side, the evolution of consumer electronics and the rise of automotive electronics are driving continued growth in the MLCC market. High-end smartphones require hundreds of MLCCs, with models like the iPhone 7 using 700 units. As 5G adoption grows, the demand for compact, high-performance MLCCs is expected to rise, supporting steady market growth of around 5% annually.
The ongoing price increases are also driving a domestic shift in the industry. Chinese manufacturers, leveraging lower production costs, are expanding their presence in the MLCC market as overseas suppliers reduce their involvement. This mirrors the path taken by LED panels, and passive components may soon follow as a new growth area for domestic companies.
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