ESMC, in early July 2018, Murata manufacturing (hereinafter referred to as "Murata") issued a notice to adjust the price of MLCC.According to the Notice, in recent years, the demand of MLCC from communications and automotive markets has far exceeded the capacity of suppliers; due to the severe imbalance between supply and demand, supply shortage will worsen. To alleviate the situation and further improve the production capacity, Murata suggestscustomers not to use Murata NRND/EOL products in the new designs. In addition, the price adjustment will be applied for certain products.

In this regard, ESMC reporters contacted Murata and confirmed that the price of notice has been issued; the price increase is mainly due to the sharp rise of raw materials costs, as well as the record-high expansion investment by Murata as its medium and long term strategy. The price increase range will be dependent on the customers and market situation.

The reasons for price adjustment

Murata said that, in recent years, the prices of raw material for semiconductors, metal, packaging and oil has been rising constantly,so as the labor and production costs, the relative stability of planned production is in trouble.

For MLCC, the electrode materials, ceramic materials, processing materials and other raw material costs continued to rise sharply. Murata has to increase investment, expand production capacity, improve production efficiency to seek to maximum supply capacity.

The market has increasing demand for MLCC, the Murata planned(April 2018 to 2019 March) 340 billion yen in fiscal year 2018 to increase investment to expand production capacity; this amount reached is record high. The MLCC planned to increase production quantity by 10%, nevertheless, the effect can’t be immediate, as both the plant construction and operation need time.

To stabilize supply, Murata will implement the price adjustment on its MLCC products.

The price increase

Some rumor said the price would increase 50% to 500%, which caused the panic sentiment in the market. The price is always the most sensitive part. Murata will specify the price depending on the specific products and customer orders.

Murata said the price adjustment is due to middle and long term expansion of production capacity and rising raw material prices; the price will be adjusted according to the specific conditions and different number of orders; there is no specific number as products vary and the cost structures differ.

Murata will also be fully committed to increase investment and production efficiency. In order to meet the growing market demand, Murata pays more attention to develop long-term strategic planning and targets.

Since last year, there was MLCC supply shortage and prices increase, which was mainly led by manufacturers from South Korea and Taiwan instead of Japanese ones.Murata issued a production halt notice, which stated thatthe production of 0603 size and above, together with and the size of 0402104 would be stopped by 2020. While gradually withdrawing from the low-end products, it increases investment to meet the demand of automotive electronics market. We can conclude that Murata's strategy is to hope that through measures such as price adjustment,the product line can be optimized, and MLCC products will be more profitable and rise to high end market.In March 2018, Murata conducted the first price adjustment to EOL products, which accounted for a small part of the entire product line. Specifically, starting from the March 2nd, for the products of 0603/ 0805 dimensions and electrostatic capacity below 1uF, MLCC started to implement the first price adjustment, the adjustment aims to reduce the "old generation products" orders, which is in accordance with the enterprise long-term strategy and to meet the market demand for the integration of resources.

Murata will carry on the second round of price adjustment.It plans to invest 29 billion yen to build MLCC (new plant is expected to start in September 2018 years and finish in December 2019). The expansion plans on investment is for company’s long term development; it can be predicted that the demand of MLCC willremain high.