'Zhongxing Incident' | Spreading the Capacitance Resistance Market, Resumption of Production Increases Out-of-stock Process

Abstract: In this protracted trade tug of war, although there was no direct impact on the export of domestic passive components, the United States banned the core chips and components from ZTE, but gave the original passive components a big blow.

The micro-network news (text / Jiufang Fang) Sino-US trade war has intensified, and the war of words has risen to a real live ammunition. According to the '301 article of China's import goods taxation list' issued by the US Trade Representative Office (USTR) on July 6, For remote control, vending machine printed circuit components will face an import tariff of 25%, and many parts used on the board, such as resistors and capacitors, will also face tariffs.

Figure 1. Sino-US trade 'salt warfare' upgraded to 'real guns'

Sino-US trade war opened, capacitor resistance has not been affected?

In the first time of the above news, the micro-network reporters connected the Chinese representative of passive components in China, Fenghua Hi-Tech and Yuyang Technology. Fenghua Hi-Tech Board of Secretaries responded: 'Because the company's direct exports to the US are very limited. The main customers are all in China. The Sino-US trade war has little impact on the company's business. In addition, the current passive components are seriously out of stock, and the domestic market is self-sufficient. Therefore, regardless of whether the United States imports capacitors imported from China. Tariffs have little impact on us.'

Yuyang Technology also expressed similar views. Most of the company's business is aimed at domestic manufacturers. The business is concentrated in smart phones, Netcom, IoT and other applications. The direct export to the US has very little share, although there are some US customers, but its The factory may be built in Brazil, Mexico and other places, not in the United States, so the trade war has not directly affected the company's product exports.

However, some analysts pointed out that this incident may have a slight impact on the PCB board customers downstream of Yuyang and Fenghua Hi-Tech. Because in the 'US 301 Survey' list, some printed circuit boards will be directly exported to the United States, such as for remote control. The printed circuit components of the vending machine are listed among them. The passive components of Yuyang and Fenghua Hi-Tech may be used on these boards. Yuyang said that there is no feedback from the PCB board customers.

Figure 2, printed circuit components for the remote control are listed in the '301 list'

According to previous reports from Jiwei.com, small household electrical appliances based on 'kitchen and health appliances' may be affected by the Sino-US trade war. However, the proportion of domestic small household appliances exported to the United States is only about 13%. In the previous reports, Feike Electric, Aucma, TCL, Midea, Gree, Little Swan and Haier all said that the company’s exports to the US accounted for less than 6% of its revenue, and its impact on itself would not be This shows that the impact of this customer on Fenghua Hi-Tech, which is mainly concentrated in the domestic appliance industry, is also within the controllable range.

The industry believes that even if a large number of domestic capacitors and resistance products are used in home appliances exported to the United States, they will not directly pose a threat to the original factory. More tariff pressure will directly force home appliance manufacturers, plus capacitors, positive resistance. During the critical period of shortage, the bargaining power of home appliance manufacturers to suppliers has been greatly weakened.

On the whole, the Sino-US trade war will not affect the capacitor resistance, the original factory, home appliance manufacturers may be affected, but also because of the small proportion of business exports to the United States and little impact.

Figure 3, vending machine printed circuit components listed in the '301 list'

The passive factory is obviously affected by the 'Zhongxing incident'

An undeniable fact is that the export tariff policy is a double-edged sword. A good tax policy is indeed more conducive to export business. Yu Yang told the micro-grid reporter that the Indian government had previously offered preferential treatment to boost the development of the local electronics industry. The tax policy encourages foreign investors to set up factories in India. Apple, Samsung, and Xiaomi have successively invested and built factories in India, which are affected by India's tariff policy. 'Hua Mi OV' is an important customer of domestic component manufacturers such as Yuyang. India's tariff preferential policies, indirectly, let component manufacturers benefit a lot from the Indian export business.

Yu Yang told reporters that in this long-running trade tug of war, although it did not directly hit the export of products, the United States banned the core chips and parts from ZTE, but they gave them a big blow. According to reports, they were banned. Before the sale, ZTE's monthly production reached 4 KK. Many component suppliers came from the mainland. In the more than three months of the ban, upstream suppliers had to suspend ZTE's business.

However, as the United States officially lifted the ban on ZTE, ZTE resumed production on July 15, and Yuyang will officially resume its supply of products to ZTE. According to the reporter, due to the suspension of production of ZTE for more than three months, many orders were owed and production resumed. In the first month after that, its mobile phone production may be higher than the previous 4KK monthly output, while the output in the next two months will be around 3KK, and will gradually return to normal level.

At present, the supply of passive components is tight, will Yuyang still give priority to ZTE? Yuyang said that because the company and ZTE have a longer cooperation, they will support ZTE after their production resumes. However, due to current production capacity constraints The delivery period can not be the same as before, the details will be resolved with ZTE. In addition, it is understood that before the suspension of production, all kinds of raw materials will remain in stock, and will not rely on new supply after the production is resumed.

The reporter learned in the interview that ZTE's supplier strategy for capacitors and resistors is also 'full bloom', Japanese, Korean, Taiwanese and Continental are involved. Therefore, this time, ZTE needs to negotiate with the parties. It is foreseeable that ZTE will gradually resume production order, but the tolerance will still be affected by the shortage of delivery.

In contrast to the shortage of capacitor products, the resistance products have reached the critical stage of shortage. The component traders from Huaqiang North operating resistors told the micro-grid reporter that compared with the previous two months, the current resistance market supply has produced a larger Changes, product supply gaps have spread from general-type resistors to high-precision resistors, and lead times have become longer. In terms of market demand, large terminal demand is still very tight, and the demand for Huaqiangbei trade market has not been hot before. 6. July is a low season. Before the peak season of 'Student Summer School' and '11 Golden Week', first-tier and second-tier manufacturers are stepping up their stocking.

According to the reporter's understanding, since the end of last year, Guoju announced that it stopped the order after the order demand is much larger than the production capacity. The resistor opened the prelude to the price increase. Wang Quan increased the price of some chip resistors by 15% in January; Interpretation will increase the price of some thick film resistors by 25%; May Wangquan once again announced that the unit price of thick film series will increase by 50% from June 1st. Driven by the price increase of Taiwanese manufacturers, April 13, the mainland Fenghua Hi-Tech raised the price of chip resistors by 25% to 30%. On June 22, Fenghua Hi-Tech revealed on the investor interaction platform that the company's chip resistance and film capacity were fully loaded.

Figure 4. The output printed circuit board is on the sanctions list, and the capacitor resistance is indirectly limited.

Talking about the impact of the Sino-US trade war on passive components, the trader stressed: 'We have been paying close attention to the Sino-US trade war, which has affected many industries and may push a new round for resistance. The price increase, after all, the renminbi is falling, many overseas customers are purchasing the original factory in US dollars.

As a capacitor supplier, Yuyang Technology expressed concern about the shortage of capacitors. He told reporters that the current trade war has little impact on the company's export business. Capacitance out of stock is still an important challenge for the company. Next, the company will still Focus on how to deal with out-of-stocks and price increases, such as by adjusting the internal structure of the company and improving production efficiency.

'Resize' to improve efficiency

Before the US tariff sanctions, capacitors and resistors have already caught up in the price surge. According to the comprehensive interviewer, there are five reasons for the shortage: First, upstream raw materials such as ceramic materials, processing materials, packaging materials, etc. Second, the demand for capacitors and resistors increased by single intelligent terminals; Third, Japanese manufacturers gradually withdrew from the large-scale 'old product group' in 0805, 0603; Fourth, new energy vehicles, IOT, AR/VR, smart speakers The demand for passive components in emerging application markets such as mining machines is driving, especially the hot and high price of the mining machine market, which has pushed the price of capacitors and resistors more than 10 times. Finally, the channel dealers deliberately deliberately Raise the price.

Figure 5, MLCC stepped into the shortage period

There are many reasons for the shortage of passive components, and the 'butterfly effect' caused by it is difficult to solve in a short time. 'This wave of price surge may continue throughout 2018, and the manufacturer's expansion plan is limited. 'Yuyang Technology revealed to reporters In view of the shortage of goods ten years ago, the expansion of production of enterprises has led to a serious overcapacity. In 2017-2018, this wave of out-of-stock manufacturers is relatively conservative in terms of expansion plans, and the expansion is only about 10-15%. 4. In the short term, the capacity supply of capacitors and resistors is still difficult to alleviate.

Then, how do manufacturers deal with the current emergency shortage? Yuyang Technology said that in order to alleviate the current shortage of goods, we must start from two aspects, one is to invest in expansion; the second is to adjust the production structure and improve production efficiency.

Murata has placed more emphasis on medium- and long-term strategic planning and target development. Not long ago, Murata revealed that it will use the means of increasing investment, expanding production capacity, and improving production efficiency to maximize supply capacity. It is understood that Murata It plans to increase investment by 340 billion yen in FY 2018 (April 2019-2019), of which 29 billion yen will be used to build a new MLCC plant (expected to start in September 2018, completed in December 2019) ), the annual production of MLCC is expected to increase by 10%.

At present, Yuyang is also actively expanding its new plant. After the completion of the new plant, the capacity of the new plant is expected to be twice that of the current old plant. However, as we all know, the increase in production capacity is not immediate, and the delivery of Japanese production equipment is 18-24 months. It takes time to build and put into production. Therefore, 'adjusting internal structure and increasing productivity' has become a top priority.

Yuyang told the micro-grid reporter that the industry generally believes that 'large size (0402) and small size (0201 or 01005)' will be an effective measure to improve productivity. In theory, 0402 will change the monthly output of 0201 after 0201 to 0402. It is several times, but the challenge of 'big' change to 'small' is that the small-size single-layer ceramics are required to be thinner, the key process technology is more difficult, and the subsequent testing and tape-making processes still require a large amount of equipment to be purchased. Therefore, this Adjustment is also a challenge for many companies.

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