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Buyers can expect continued stable to lower pricing for capacitors in 2016 thanks to plenty of availability and lower demand across end markets. Lead times also remain stable in the off the shelf to six to 10 week range. Pricing and availability trends are a continuation of last year’s market. Distributors and component manufacturers report that a big source of pain in 2015 was continued price pressure on passive components, which impacted the North American market.
“We haven’t seen any stabilization in pricing this year,” said Jim Wright, vice president of engineering and marketing, NIC Components. “For NIC, the yen to the dollar currency exchange rate has made it a little more challenging for us. Everybody is always working on slimmer and slimmer margins.” However, there is no pressure on lead times for any of the technologies – ceramic, tantalum or aluminum, said Wright. “Lead times are typically off the shelf to eight to 10 weeks for all the technologies. I haven’t seen anybody quote more than 10 weeks for any part. Parts with longer lead times are typically “B” or “C” level items with only a few customers.”
While buyers enjoyed low pricing and short lead times last year, capacitor unit shipments in North America were down 10.5 percent and sales fell by 9.4 percent in 2015, according to the ECIA. “Forty-four percent of capacitor sales in 2015 were shipped into the distribution channel,” said the industry organization.
Yet, sales of passives/electromechanical (EM) devices through the North American distribution channel increased slightly to $4.5 billion or 17 percent of total revenues, up slightly from $4.2 billion or 16 percent share in 2014, according to EPSNews’ soon-to-be released Top 50 Electronics Distributors report. ECIA reports that inventory corrections in both the direct and distribution channels in 2015 contributed to the decline in capacitor sales in 2015, led by tantalum products. “For the most part, those corrections have been made or at least nearing an end,” according to ECIA. “If end-market demand improves, inventory replenishment is expected to take place. We are starting to see evidence that the market is improving as the capacitor book to bill in Q4 CY15 was a strong 1.06.” 
Total reported bookings for all capacitors in North America were down 12.2 percent in units and 10.5 percent in dollars in 2015 with book to bill at .97 in units and 1.03 in dollars, reported ECIA.
This translated into a tough market for capacitor suppliers in 2015. In many cases, electronic component manufacturers, including capacitor makers, tried to offset the low pricing and low margins of commodity devices by focusing their new product development on high reliability and high performance parts.
“Most of the manufacturers, including ourselves, are looking at higher value or value-added type capacitors, and other passive components, to offset the more commodity, low price, and increasing price pressure on ceramic capacitors,” said Wright. The good news is that new design opportunities are opening up in 2016. “Business has been tough but we’ve seen a lot of new design opportunities this quarter,” said Wright. “It was quiet in the last quarter of 2015, but in this quarter there is a lot of design going on, which is encouraging.”
Most of the new designs are coming from power, industrial, and automotive applications, in North America and Europe, Wright added. “Even in Asia, which historically for passive components hasn’t been a design channel, we’ve recently seen an increase in designs, primarily out of our Singapore operations.” “We’re always bringing new products to market. We have over 280 different product series now, and likely will have over 300 by the end of the year,” said Wright. “These are always higher performance devices. All of our new products are higher average selling price (ASP) and higher value types that offset the price erosion that we see across the board for all the different types of capacitors.”
In most cases, the availability of high performance parts work in terms of offsetting commodity pricing. But in 2015 manufacturers and distributors - including capacitor suppliers - that supply the oil and gas industry saw their revenues tumble as oil prices continued to drop. Capacitors used in the oil and gas industry typically are very high reliability devices that have to operate in severe and high temperature environments, which makes them difficult to sell into other markets without it being an overkill in specifications.
“The slowdown in energy [the oil and gas industry] had a huge impact on the American market,” said David Valletta, executive vice president, worldwide sales, Vishay Intertechnology. “We supply quite a bit of specialty capacitor products through that market,” Valletta added. “These are capacitors that are designed to operate at high temperature, and are high ASP-type products.”
“The energy sector has been a big drag on the U.S. components market,” said Valletta. “It also resulted in secondary affects. We supply directly to customers who manufacture drilling equipment and to industrial customers who also supply to the energy sector. So it was a double whammy in reducing the market size.”
The industrial sector, which is the biggest market for most distributors and manufacturers in the U.S. market, is soft, said Valletta. However, the automotive market is still healthy, although the growth rate is slower, and the computer/server market is “decent,” and the military market is “okay, with some programs doing well,” he added. “In general, pricing is stable with mild price pressure right now,” said Valletta. “We see a normal amount of price pressure. In a market that is weak, everything gets a little tighter.”
Despite the downturn in the oil and gas industry, and lower demand across some industry sectors, capacitor manufacturers continue to focus on developing high performance devices, particularly for other industrial, medical and automotive applications that demand tougher capacitors. A few examples include devices from AVX, NIC Components, and Vishay. New tantalum products include a new series of medical-grade solid tantalum capacitors from AVX Corp. that touts lower DC leakage (DCL) values than any competitive offering, and an extension of Vishay’s T55 series of vPolyTan surface-mount polymer tantalum molded chip capacitors with new devices in D and V case sizes (and lower ESR) and higher voltage ratings. NIC Components recently added two new aluminum electrolytic capacitor product series. The automotive-grade NAYT series extends the temperature range to +135 deg C, and the NSPE‐TF series uses improved aluminum foil technology that delivers higher capacitance values, reduced case sizes, and a lifetime rating of 4,000 hours at +125 deg C.
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