MLCC Shipments to Fall 3.6% in Q4, AI Demand Strong
According to the latest survey by TrendForce, recent economic indicators show a continued easing of inflation in the U.S. market. In response, the Federal Reserve announced a rate cut in September to mitigate the potential slowdown in economic growth or recession. Additionally, fluctuating international geopolitical dynamics and the unpredictable landscape of the upcoming U.S. presidential election may lead to a decrease in consumer spending willingness. A conservative consumer attitude could pose significant risks to year-end holiday shopping demand. TrendForce estimates that MLCC (Multi-layer Ceramic Capacitor) suppliers will ship approximately 1.205 trillion units in Q4 2024, reflecting a 3.6% quarter-over-quarter decline.
TrendForce notes that ODMs (Original Design Manufacturers) have reported an average decline of 5% to 8% in laptop order forecasts for Q4. Brands are adopting a conservative approach towards order planning for smartphones, laptops, networking devices, and tablets. Only select commercial laptops and newly launched foldable smartphones have seen a slight uptick in demand. Consequently, ODMs have adopted a cautious approach in material preparation as of mid-September, despite the anticipated demand from the Chinese mainland during the National Day holiday and Western holiday seasons. While Apple has introduced the AI-enabled iPhone 16, the maturation of Apple Intelligence applications remains uncertain, casting doubt on whether it will stimulate a significant upgrade cycle.
Conversely, demand for AI servers continues to rise. Although the NVIDIA Blackwell GPU's mass production has been postponed to mid-Q4 due to mask design modifications, the market demand for the Hopper architecture remains strong. Orders for the H100 and H200 GPUs have increased by 65%, with orders for the downgraded H20 GPU also rising by 33%.
This trend is driving demand from U.S.-based CSP (Cloud Service Providers) for 400G switch routers and AI acceleration cards utilized by Amazon Web Services (AWS) that incorporate Annapurna network chips. As a result, several networking companies have reported an average order forecast increase of nearly 15% for Q4. TrendForce highlights that there is little change in the demand for high-end MLCC stocking in Q4, allowing Japanese and Korean suppliers more time to adjust their production capacities to meet the expected surge in GB200 orders next year.
With the Federal Reserve officially commencing a rate-cutting cycle, the U.S. dollar has weakened, leading to a rise in Asian currencies. By mid-September, the Japanese yen even surpassed 140 yen to 1 U.S. dollar. TrendForce indicates that MLCC suppliers are facing a slowdown in order demand, and the increased risk of currency exchange losses will heighten operational pressures. As a result, suppliers are planning to manage production capacity utilization rates and reduce inventory levels to stabilize product pricing, thereby maintaining revenue and profitability.
Currently, the average production capacity utilization rate for Japanese and Korean manufacturers remains above 80%, while Taiwanese and mainland Chinese manufacturers are operating between 60% and 70%. Due to a slower-than-expected start to the peak season in the second half of this year and the anticipated decline in Q4 order demand, suppliers are adopting a more cautious stance regarding operations and pricing strategies.
